Thursday, October 22, 2020

Israel’s Largest Banks in American Tax Scams

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It’s in Israeli media, but not in the US: three of Israel’s largest banks have been actively laundering money for thousands of wealthy Americans in massive tax-evasion schemes. The US State Department lists Israel as a “major money laundering country.”

Israel’s three largest banks; Hapoalim Bank, Leumi Bank, and Mizrahi Tefahot Bank have all been ordered to pay record fines, which collectively are set to total over $1 billion, to the U.S. government after the banks were found to have actively colluded with thousands of wealthy Americans in massive tax-evasion schemes.

The scandal, though it has been reported on in Israeli media, has garnered little attention in the United States. The media black-out has been so surprising it was even directly mentioned by the Times of Israel, given that similar revelations about other banks and offshore tax-evasion schemes such as those contained within the Panama Papers led to global protests and even the resignations of some world leaders.

The settlements are the end result of a series of Department of Justice (DOJ) probes that were related to the DOJ’s 2007 investigation targeting UBS AG, Switzerland’s largest bank. The focus of the probe turned to Israel a few years later in 2011, when it was determined that the Swiss subsidiaries of several of Israel’s largest banks had actively aided Americans seeking to launder their money.

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As the probes advanced, the DOJ found that the three banks, Israel’s largest when ranked by net income and total assets had a history of collaborating with wealthy Americans in tax evasion schemes, not just in their Swiss subsidiaries but in Israel as well. Most of those wealthy Americans were Jewish Americans or dual U.S.-Israeli citizens who hid their U.S. citizenship from the Israeli banks.

A year after the probes into Leumi, Hapoalim and Mizrahi Tefahot were made public, the U.S. State Department notably listed Israel as a “major money laundering country… whose financial institutions engage in currency transactions involving significant amounts of proceeds from international narcotics trafficking or other serious crime.”

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