Days after police recommended indicting Prime Minister Benjamin Netanyahu on a series of corruption charges, Israel’s top cop said Tuesday that stricter international money laundering rules have launched a “revolution” enabling police to expose corrupt politicians, but that further measures were needed to tackle the growing phenomenon.
“Public corruption and money laundering — the online world is generating a huge revolution in these areas,” Police Commissioner Roni Alsheich said in a speech to the Conference of Presidents of Major Jewish Organizations in Jerusalem, referring to abuse of power and breach of trust by public officials.
“In the past,” he said, “there were ‘sanctuary countries’ for money laundering and high walls were built between the various enforcement agencies, in order to preserve compartmentalization. When trade in cash was carried out without restrictions, and no one could see the overall picture, corruption had free reign, almost without disturbance.”
The police commissioner added that “the darknet and virtual currencies have created a paradise for money laundering for various purposes and pose an enormous challenge for the police.”
But according to Alsheich, adherence to international money laundering standards has led to breakthroughs in investigations of organized crime and high-level corruption.
“Today, due to international regulation, these sanctuaries have disappeared one after the other. Countries don’t want to be placed on international blacklists so they are compelled to accept these regulations,” he told the US Jewish leaders.
Alsheich’s remarks come as Israel gears up for an onsite evaluation next month by the Financial Action Task Force (FATF), an international body that sets global anti-money laundering standards, and appeared to be a veiled reference to stifled Israeli efforts to increase regulation and avoid those “international blacklists.”
Eighteen years ago, in June 2000, FATF publicly named and shamed Israel on a blacklist — along with 14 other jurisdictions, including The Bahamas, Cayman Islands, Cook Islands, Lebanon, Panama, the Philippines, and Russia — as non-cooperative and deficient in its anti-money-laundering regime.
In the intervening 17 years, Israel has progressively tightened its anti-money laundering regime, and passed numerous laws in the hope of becoming a full-fledged member of the FATF. Next month’s inspection, the culmination of a series of evaluations in which Israel has made progress, is Israel’s opportunity to clear its name and join the ranks of credible nations on this issue.
But a law central to the bribery allegations against Netanyahu may have undermined those efforts by providing a back door that allows tax evaders and criminals to immigrate to Israel and keep their earnings hidden — secret from both Israeli authorities and from any other government that might inquire. Netanyahu and his wife Sara are alleged to have received gifts totaling about NIS 1 million ($282,000) from billionaire benefactors, notably Milchan and Australian tycoon James Packer, in exchange for working to expand the provisions of the little-known tax law known as Amendment 168 to the Tax Ordinance, which grants a 10-year exemption from filing and paying taxes on income earned abroad by new immigrants and returning residents.
Alsheich warned Tuesday that internet-era globalization, which has in part allowed immigrants to move to Israel while retaining vast business interests abroad, has changed the nature of crime and that international law enforcement bodies must also adapt.
“Since the web has no geography or borders, it exposes Israel to criminal threats from all over the world. Without a strong police presence on the web, without a dramatic expansion of international police cooperation, there is no chance of effectively dealing with the scale of this threat,” he said.
In fact, said Alsheich, both terrorism and financial crime are increasingly moving online and as a result, police efforts to tackle corruption can also help in keeping Israelis safe.
“The net has made the world flatter. Enemies can act remotely, or by proxies using cyber as an intermediary for strategic attack. Or by using the internet to influence public opinion and decision-making,” he said.
“In short,” he added, “it’s possible to spill the blood of the country without classic armed forces, with much smaller expenses and avoiding a heavy diplomatic price. A significant security burden in this new world is gradually passing from the shoulders of the IDF to the shoulders of Israel Police.”
Referring to the investigations against Netanyahu and particularly the subsequent criticism leveled against the police by the prime minister, Alsheich said that in order to effectively protect the public, both from terrorism and corruption, police required a certain level of “public trust.”
Last Tuesday, police recommended Netanyahu be indicted for bribery, fraud and breach of trust in two criminal investigations — Case 1000 and Case 2000, as they are known — involving suspicions he accepted gifts and favors from wealthy businessmen in exchange for advancing their interests.
Netanyahu called the police recommendations “unfounded,” alledging a “biased” conspiracy against him, maintaining his innocence and saying he would lead Israel for years to come.
“Criminals have always had an interest in damaging the public trust by promoting and maintaining a negative image of the police,” Alsheich said Tuesday.
“For example,” he noted in pointed comments specifically referring to public corruption probes, “during criminal proceedings, they try to create doubt as to the credibility of the police officer’s testimony and his professionalism.”