Anti Money Laundering

Anti Money Laundering

Bank Hapoalim Anti-Money Laundering and Counter-Terrorist Financing Policy Statement

 

Introduction
Israeli AML and KYC regulation applicable to banking entities include: Prohibition on Money Laundering Law, 5760 – 2000; Prohibition on Money Laundering (The Banking Corporations’ Requirement regarding Identification, Reporting, and Record-Keeping for the Prevention of Money Laundering and the Financing of Terrorism) Order, 5761–2001; Bank of Israel Proper Conduct Directive No. 411.

 

The local AML regulators which are involved in reporting, enforcement and supervision are the Israeli Central Bank (Supervisor of Banks - Bank of Israel) and the Israeli Money Laundering and Terror Financing Prohibition Authority (the Anti Money Laundering Authority).

 

Bank Hapoalim BM (Hereinafter: "The Bank") is a publicly traded company which is listed on the Tel Aviv Stock Exchange (TASE) and regulated by the Israel Securities Authority.

 

The Compliance Function and Group Compliance Policy
The compliance function in the Bank operates as an independent function, which serves as a "second line of defense" and is part of the Bank’s organizational culture. The compliance function is responsible for assisting senior management in effectively managing the compliance risks that the Bank faces.

 

To facilitate compliance with all requirements, the Bank has appointed a Chief Compliance Officer, who are responsible for overseeing the Bank's AML/CFT program and to ensure the implementation of the Group Compliance Policy in Israel and abroad.

 

The Bank in its Group Compliance Policy has implemented AML and CFT compliance programs, which apply also to its branches and subsidiaries worldwide.
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.

 

Compliance Program
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
  • Training.
     

 

Customer identification
Every account must be opened in one of the branches in the presence of the customer (or someone with power of attorney from him). A banker will conduct an introductory face to face session with the potential customer, in order to determine the type of account and the banking products that are suitable for the customer and the purpose of the account.

 

Account opening procedures in the Bank include several methodological steps which include customer identification and verification, obligatory KYC questionnaire (with additional questions for specific categories of customers), in certain circumstances supporting references regarding the customer's source of funds in general and specifically the funds that will be deposited or transferred to the account, receiving a declaration of beneficiaries and controlling persons (regarding entities), checking the customer name in various sanction lists (OFAC, EU, UN and Israeli), receiving self-certificate for FATCA and CRS purpose (for Israeli individuals and entities on a Hebrew form or relevant W-8 Form and for foreign on the relevant W-8 Form, comparing the compatibility of the KYC information with the self-certification (some information by the bankers and some by the IT system). Although these steps are separated methodologically, they are interwoven into each other in the process.

 

The banker will ask the customer to provide or show him specific Documentary Evidence for proving his identity. For natural persons: Israeli Identity Card in case of an Israeli resident, Passport and another formal supporting document in case of a nonresident. For entities: certificate of incorporation, extracts from the Israeli Companies Registrar or official company register in another country, copy of articles of incorporation or association, or other organizational documents. Non Israeli entities are required, in addition, to supply a letter of "Good Standing" from an attorney from the entity jurisdiction, and to translate all required documents to Hebrew or English. In addition, all corporations are required to present a resolution by the board of directors to open an account with the bank.

 

Under the Bank's policies and procedures, the Banker is required to understand who are the ultimate beneficial owners or the ultimate controlling persons in every account that is an entity rather than a natural person, to receive a declaration of beneficial owners and controlling persons, and to confirm their identity.

 

“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 issues: 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 checks, controls and updates 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's risk rate will determine the frequency of the review. High-risk accounts are reviewed annually.

 

Walk-in customers
The Bank serves walk-in customers and monitors their activity. In respect to such customers, the banker is required to adhere to the following guidelines:

  • The banker  shall inquire about the essence and reason for the requested service or transaction; for cash transactions, it is required to inquire the customer regarding the source of funds and obtain supporting evidence to the extent available;
  • It is required to identify the customer face-to-face based on an official identification card or certificate and keep record of the customer’s identity and the details of the transaction; a foreign resident will be identified using two identification certificates;
  • For a cash transaction exceeding NIS 10,000 or any other transaction or activity exceeding NIS 50,000 it is required to maintain a copy of the customer’s identification card or certificate;
  • For any transaction or activity exceeding NIS 50,000 (which are required to be reported as CTR), it is also required to obtain from the customer a written declaration regarding any beneficiaries and holders of controlling interest (in case of a corporation).

 


Blocking activity related to terror financing
The Bank's systems scan and screen customer names and transaction data (for example: account owners, authorized persons with power of attorney in the account, beneficial owners) 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 and Currency Transaction Reports

  • 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 also reports automatically Currency Transaction Reports (CTR) to the Anti Money Laundering Authority according to the definitions of the relevant provisions of the law (i.e. – for each deposit, withdrawal, or exchange of currency of more than NIS 50,000).

 

Record Retention
The Bank retains all relevant banking documents and records for the prescribed period as required by local laws.

Correspondent Banking

  • The Bank examines familiarizes itself and understands the nature of the business of the banks and financial corporations to whom it provides correspondent services.
  • The Bank does not maintain correspondent relations with a financial institution that is not supervised with respect to money laundering and terror financing.

 

Anti-Money Laundering Wolfsberg Questionnaire

 

USA Patriot Act Certification 2.17

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