Bank Hapoalim Anti-Money Laundering and Counter-Terrorist Financing Policy Statement
Bank Hapoalim Group (The Bank) is committed to strictly uphold and comply with all rules and standards as well as any other provisions which, by law, apply to the Bank with regard to Bank/customer relationship, Anti-Money Laundering (AML) and Counter-Terror Financing (CFT). The Bank in its Compliance Group Policy has implemented an AML and CFT compliance programs, which apply also to its branches and subsidiaries world-wide.
Adherence and compliance to the Bank group policy is the responsibility of all employees. In this framework, the Bank requires its employees and managers to adhere to high standards and to stringently maintain the regulations on matters of compliance. It is the policy of the Bank to take appropriate steps to prevent persons engaged in money laundering, terror financing, fraud, tax offences, or other financial crimes, from exploiting the Bank's network, products and/or services.
The Bank examines, on a regular basis, its compliance strategy, the objectives and goals in order to implement and maintain an effective compliance plan in reference to the Group activity which reflects high standards and best practice.
To facilitate compliance with all requirements, the Bank has appointed a Chief Compliance Officer, who is charged with the responsibility to oversee the Bank's AML/CFT program and to ensure the implementation of the Group Compliance Policy in Israel and abroad.
The Bank has developed and implemented written AML/CFT policies, procedures, internal controls as well as systems, which include but are not limited to the following:
- A customer identification program and procedures;
- Customer Due Diligence and Enhanced Due Diligence based on risk approach methodology;
- Monitoring of customer transactions and activity;
- Screening of names and relevant information against watch lists;
- Reporting of suspicious activity;
- Record retention; and
The Bank maintains full cooperation with law and regulatory authorities in legislations, investigations and inquiries in Israel and abroad.
As an enterprise-wide program the Bank's Compliance Policy applies to the Bank's branches and subsidiaries in Israel and abroad. Wherever there is a conflict between local laws of a subsidiary or branch of the Bank outside of Israel and Israeli laws in regard to the prohibition of money laundering and financing of terror, the stricter provision will apply. The policies abroad were implemented with the appropriate changes and to an extent that this does not constitute any contradiction with local law. Implementation of such policy will not detract from the obligation to comply with any other local law and is not to be regarded as enabling the implementation of acts that have been prohibited or restricted by local laws.
The Policy in Detail:
- The Bank verifies the identity of the persons opening the account, the account owners, beneficiaries, agents and authorized signers and controlling parties of a corporation (if any) prior to opening an account;
- The Bank conducts a face-to-face identification procedure at account opening; and
- The Bank acts to understand the relationship between the parties involved in accounts managed for and on behalf of third party beneficiaries.
“Know Your Customer" (KYC)
The Bank's KYC policy implements a "Risk Based Approach" that requires different levels of in-depth review of customers and activity.
- Prior to opening an account for a customer, an adequate KYC process must be carried out. A risk based approach in implementing KYC account opening procedures is intended to enable the Bank to understand, inter alia, the purpose of the account, the expected activity, to determine the customer profile and to assess the risks associated with the customer.
- In determining risk levels, various factors are considered such as geographic locations, anticipated balance or activity, PEP etc.
- An enhanced due diligence procedure is carried out for high-risk customers according to the Bank's risk model.
- KYC questionnaires, at the minimum, include questions regarding the following matters: reason and purpose of opening the account, expected activity, its type and frequency, sources of capital and wealth, occupation of the customer, whether he holds a senior public position (PEP) in Israel or abroad and whether the customer had been refused service by any bank in Israel or abroad for regulatory reasons.
Understanding the Nature of Activity
- As detailed above, the Bank strives to obtain information sufficient to develop an understanding of normal and expected activity for the customer, as well as to understand and verify that it is reasonable under the circumstances.
- During the life of the account, the Bank regularly maintains follow-up, control and update information in order to verify that the activities that are being carried out in the account, match the information which the Bank has, from the standpoint of business profile as well as the source of funds.
Source of Funds
- Determining the source of funds prior to account opening or transaction processing is intended to prevent the placement and introduction of unlawful or illegitimate funds to the Bank and as such play a central role in the framework of AML and combat against terror financing.
- The Bank exercises appropriate caution when there is a concern regarding the origin of the funds and acts to prevent the abuse of its services, products and systems for money laundering and terror financing.
Enhanced Due Diligence
- The Bank performs an Enhanced Due Diligence when opening an account that is rated "High Risk". This process includes, inter alia, an in-depth and comprehensive analysis of the customer, the current and the expected activity as well as requiring corroborating documentation.
- Enhanced due diligence is also performed for those accounts whose, risk rating has changed to high risk.
Periodic Account Reviews (PAR)
- The Bank carries out periodic reviews of all its customer accounts. The account risk rating will determine the frequency of the review.
- The Bank monitors the activity of walk-in customers such as tourists, foreign workers etc. and sets identification requirements and activity thresholds for walk-ins who operate without opening an account.
Customers who are Politically Exposed Persons (PEP)
- The bank screens its customer base to detect politically exposed persons, in Israel or abroad. Accounts held by such persons will be rated as "High-Risk".
Non-Provision of Service to Certain Customers
- Refusal or reluctance of a customer to provide information or sign the documents that are required to comply with AML provisions will be regarded as a reasonable cause for refusing to provide a banking service, open or continue the management of an account.
Accounts that will not be opened or managed
No accounts will be opened or managed in the Bank for the following:
- Entities and individuals who are suspected of having an affiliation to terror activities, including those listed on the Israeli Terrorist List, the OFAC, EU, UN and any other watch list as determined by the Bank and required by local law.
- Individuals or entities who are engaged in the conduct of gambling, including by means of internet websites (subject to local law regarding the legality of activity).
- Corporations and banks that have no physical address.
- Customers who manage activity relating to binary options, either directly or indirectly.
Blocking activity related to terror financing
The Bank's systems scan and screen customer names and transaction data to ensure that a person or company does not transact business with, on behalf of or for the benefit of individuals who are the target of various law enforcement agencies, through the various local and international watch lists such as the Israeli Terrorist List, OFAC, EU, UN and any other watch list as determined by the Chief Compliance Officer or to which the subsidiary or branch is required according to local law.
Connections with Iran
As part of the international effort to frustrate Iran's ability to develop non-conventional arms that constitute a threat to the existence of the State of Israel, The Bank does not invest in or advance credit to corporations that maintain a material business connection that contributes, directly or indirectly, to the economy of Iran. A deviation from that policy, although possible, is subject to prior approval of the Bank's management, and only in a case where the relevant corporation is not on the list that is determined by the competent authority for the purpose according to the law in Israel.
Suspicious Activity Reporting
- The Bank detects and reports potentially suspicious transactions that flow through the Bank. According to statute, there is an obligation to report to the relevant authority any activity of a customer which, in light of the information that is held by the Bank, perceived by it to be irregular or suspect with regard to the prohibition of money laundering and/or terror financing.
- Irregular or suspicious activity is defined according to the requirements of local laws, best practice and directives of the Chief Compliance Officer.
- The Bank utilizes various IT systems designed to detect, monitor and report unusual and suspicious activities. The names of accounts and transactions are scanned against public databases to detect PEPs and potential involvement with unlawful activity, money laundering and terror financing.
- Proper risk rating is assigned to all accounts based on risk models.
- The Bank is committed to further develop and improve its automated systems to enhance detection and monitoring capabilities for AML and combat against terror financing.
- Compliance focused classroom and computer based training sessions are being held by the Bank for all employees and managers according to an annual training program that has been approved by the local chief compliance officer, local management and the Bank's Chief Compliance Officer.
- As part of the training program, theoretical and practical classroom and web-based sessions to the different levels of employees and managers are held and include mandatory testing.
- Frequently, compliance teams participate and attend designated professional seminars and classes.
The Bank retains all relevant banking documents and records for the prescribed period as required by local laws.
- In order to assess the Anti Money Laundering risks involved in managing correspondent accounts, the Bank examines, familiarizes itself and understands the nature of the business of the banks and financial corporations to whom it provides correspondent services, and monitors their activity.
- The Bank does not maintain correspondent relations with a financial institution that is not supervised with respect to money laundering and terror financing.
Tax Evasion as a Predicate Offense
During the last quarter of 2016, an amendment to the Prohibition on Money Laundering Law took effect which, inter alia, included the addition of several grave tax offenses, upon the fulfillment of certain conditions, to the list of offenses listed in the First Schedule to the Prohibition on Money Laundering Law, 5760-2000, i.e. predicate offenses.
The law prescribes 3 types of offenses in the field of taxation which are deemed as a “predicate offense” for purposes of the prohibition on money laundering:
- Offenses under aggravating circumstances for purposes of the Value Added Tax Law
- Certain offenses for purposes of the Income Tax Ordinance
- Certain offenses for purposes of the Land Taxation Law (jointly and severally: “Grave Tax Offenses”)
According to the existing legal provisions, banks are required to identify and report irregular activity, as defined in Section 9 of the Prohibition on Money Laundering Order (Duty of Identification, Reporting and Recordkeeping of Banks for the Prevention of Money Laundering and Terror Financing), 5761-2001.
Therefore, all of the provisions from the field of the prohibition on money laundering that apply to banks shall apply, from this point forth, also in connection with the commission of Grave Tax Offenses by the customer, and particularly provisions pertaining to “Know Your Customer”; controls; monitoring and identifying irregular activity.
Anti-Money Laundering Wolfsberg Questionnaire
USA Patriot Act Certification 2.17