Bank Hapoalim, which has been under investigation by the US Department of Justice for allegedly helping American citizens evade taxes, told its shareholders Wednesday that it was setting aside an additional $75 million to cover a potential settlement with the US government. This brings the total amount it has set aside for this purpose to $343 million or NIS 1.2 billion.
Hapoalim said that as the investigation — details of which are not publicly available — proceeds, more of its clients may be relevant to the investigation than it previously thought.
The bank said in a message to its shareholders that the amount to be set aside could potentially climb even higher.
Bank Leumi paid $400 million to the US government in 2014 to settle a US Department of Justice investigation into its activity helping US customers evade taxes in 2002-2010. Israel’s fourth-largest bank, Mizrahi-Tefahot, is also under investigation by the Justice Department.
The Bank of Israel has been demanding much tighter anti-money laundering checks in recent months and years. In a December 2017 speech at a conference celebrating the 15th anniversary of the Israel Money Laundering and Terror Financing Prohibition Authority, Banking Supervisor Hedva Ber said these stricter controls are a direct result of the US Justice Department investigations into the three Israeli banks, on the heels of its money-laundering investigations into UBS and other Swiss banks.
“Twenty years ago there was no awareness of this issue,” she said.
“Israeli banks did not ask customers about the source of their money and did not ask if they had paid taxes or not. But today, whenever I visit a bank, the words on every clerk’s tongue are compliance, compliance. We have been telling banks in the last few years that we do not have tolerance for risk in compliance. If there is a doubt then there is no doubt: do not open an account [for high-risk clients] and do not carry out the transaction.”