France Investigates Israeli
Banks For Money-Laundering
By Sharon Berger and Zev Stub
Jerusalem Post

December 30th, 18:50--Three of Israel's five leading banks are under investigation by French authorities as part of a larger, ongoing probe of a money-laundering network between France and Israel.
The network used Jewish charitable institutions and cultural institutions based in France to process illegally-acquired money.
An executive from Bank Leumi France SA is among those under investigation, alongside workers from Israel Discount Bank and the First International Bank of Israel according to recent reports. In November French officials said there were some 80 suspects in the case including six rabbis. Six people are reportedly already in jail.
"The misuse of banks by money laundering networks" is the judicial inquiry's focus said Leumi's French spokesman, noting that no charges have been placed.
The French media reported that both Israel Discount Bank and First International Bank of Israel are also under investigation by French authorities regarding their possible involvement in a money-laundering network since 1996.
A Bank Discount spokeswoman said the bank was "cooperating with [investigators] in whatever ways" they could. She denied the bank's involvement with the affair.
FIBI's spokesman denied that the bank has been under investigation.
"No one came to ask us questions," he said, adding, "We don't even have any business activities in France."
"Investigators are interested in the flow of checks from Israeli banks, including Discount Bank...passing through France," French daily Le Monde reported recently. "Large withdrawals were made from checks delivered this way."
Sources said that the Israeli banks were being checked as part of a larger investigation but insisted that their involvement had been only technical, with the Israeli banks clearing the checks in question rather than cashing them.
They noted that the focus of the investigation was not on the Israeli banks but on a number of other banks including the French branch of Barclays, Societe Generale SA, France's third-largest bank, BRED, part of the Banques Populaires group, and Societe Marseillaise de Credit, owned by the UK's HSBC.
Leumi last month saw the manager of its Swiss operations removed by the banking regulator for violating money-laundering laws by accepting assets from Peruvian spy chief, Vladimiro Montesinos.
The increased spotlight that Israeli banks have received recently due to money laundering allegations is unlikely to speed up Israel's removal from the Financial Action Task Force black list in February 2002. Expectations of coming off the black list have also been dampened by the replacement of anti-money laundering head Lior Horev by Yehuda Schaeffer last month when Horev fell out with the Justice Ministry over the slow pace of implementation of the unit, which is not yet fully operational.
In addition to Israel, the FATF blacklist includes the Cook Islands, Dominica, Egypt, Guatemala, Hungary, Indonesia, Lebanon, Marshall Islands, Myanmar, Nauru, Nigeria, Niue, the Philippines, Russia, St. Kitts and Nevis, and St. Vincent and the Grenadines.
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