Earlier this month, a 67-year-old diamond dealer was caught at Israel’s Ben Gurion Airport with 200,000 Euros in cash.
After disembarking from a flight from an eastern European country, he began walking through the green “nothing to declare” section of customs while speaking on his phone.
Customs officials became suspicious of the man and approached him with a specially trained cash-sniffing dog, which was able to sniff out several wads of cash in his luggage, totalling 200,000 Euros.
The Israel Tax Authority described the incident in a press release this week.
The traveler told customs officials that he had been distracted by his phone conversation and had forgotten to declare the money, the Tax Authority said.
Tax investigators questioned the man and after determining that the source of his money was not criminal, but merely a cash advance on a diamond sale, fined him NIS 120,000 ($35,000).
In December 2017, the Knesset passed a law reducing the amount of undeclared cash that can be brought into the country at Israel’s borders from NIS 100,000 ($29,000) to NIS 50,000 ($14,400), and NIS 12,000 ($3,500) at border crossings with Gaza, Egypt and Jordan.
New immigrants, who were previously exempt from the requirement, are now subject to it as well. A source within the Tax Authority told The Times of Israel that tax authorities have caught 40 individuals breaking the new law since they began enforcing it in mid-February.
The same source told The Times of Israel that the Tax Authority has the right to fine people up to five times the amount of money seized, depending on the gravity of the circumstances.
The crackdown is part of a recent national effort to combat money laundering. In the last year, residents of Israel with income or assets abroad report facing increased scrutiny. Banks are asking probing questions about the source of their income, requiring proof that they paid taxes abroad, and even closing bank accounts.
Meanwhile, in just the last two years, Israel’s Knesset has rushed through a slew of unprecedented anti-money laundering laws: a law that makes severe tax evasion a predicate offense for money laundering, a law requiring “gray market” money service providers to obtain a license, as well as a law reducing the amount of undeclared cash one can carry across borders from NIS 100,000 to NIS 50,000.
The reasons for these changes are twofold: the investigation of three Israeli banks by the US Justice Department for facilitating tax evasion as well as the fact that Israel considers it a national priority to become a member of the Financial Action Task Force, a multinational body that sets global standards for combating money laundering.
Suitcases stuffed with cash
Every six months, the Tax Authority publishes a list of fines enacted against individuals who try to cross borders with large sums of cash. The vast majority of these fines occur at Israel’s borders with Arab countries. Many others involve individuals travelling to and from Russia, the Ukraine, African countries and France.
In one incident, in January 2016, a 19-year-old yeshiva student from Paris was stopped as he walked through the “nothing to declare” section of customs at Ben Gurion Airport.
Customs officials opened his luggage and were startled to find over 541,000 euros in cash that had been carefully hidden in a cotton-candy making machine. In this case, the Tax Authority confiscated the entire amount. The actual owner of the cash was a man by the name of Meir Rotnimer, a fundraiser for yeshivas and kashrut supervisor who claimed that the source of the money was loans he took out in Hungary as well as personal savings from his salary that he planned to use to buy an apartment for his son.
In another incident in April 2015, customs officials caught a French-Israeli citizen by the name of Michel Dabi at the airport with 448,000 Euros on his person. He told authorities that the source of the funds was an advertising agency that he owned in France as well as lottery winnings and winnings from betting on horse races. He said the purpose of the money was to help his family living in Israel and for expenses related to his own immigration to Israel.
Dabi was fined NIS 350,000.