Analysis
Israel Stalls on Monitoring ultra-Orthodox Charities, Exposing Them to U.S. Sanctions
Ultra-Orthodox charities are considered high-risk for money laundering, as all their operations are in cash and they lack all monitoring
After years of foot-dragging the Knesset is being asked yet again to debate the sensitive issue surrounding money laundering and tax evasion risks involved in the work of religious charities.
The debate is being run by the most senior Haredi figure in the Knesset, Finance Committee chairman Moshe Gafni (United Torah Judaism), so it is doubtful whether we’ll see any substantial progress soon on the issue.
It’s been two years since a bill was introduced to monitor the charities that provide loans without interest to the needy. Gafni has taken some steps with regard to the legislation but hasn’t really advanced it.
Tuesday’s debate will focus on the question of which organization would monitor these charities. It’s a strange question considering the fact that the bill says it should be the body that monitors non-banking credit institutions in Israel, the treasury’s Capital Markets Authority.
But Gafni is unhappy with this organization, especially since the authority has insisted on full control and Gafni would prefer to see an easier approach.
At first he tried to advance a strange proposal to establish a new financial monitoring body in the welfare ministry. When the state objected, Gafni checked out other possibilities. Several weeks ago he checked out the prospect of the bank monitors though they are no less strict than the capital markets unit. The Bank of Israel did indeed rejected that idea. But Gafni’s idea gave the impression that the main reason for his coming up with the alternative was so as not to look like he was dragging his feet on the legislation.
Gafni has invited a fourth government agency to the meeting, the Justice Ministry’s Corporations Authority, to see whether they would be willing to oversee the charities, via a more lenient approach than other authorities.
This appeal will also prove futile, as the Corporations Authority will not be able to undertake this job so long as the state sticks to its position that it’s a task that belongs to the Capital Markets Authority.
Time is running out for the charities and the country. The fact that they are not being monitored, hence their operations run a significant risk of money laundering crimes, exposes them to the risk that American banks will stop working with them. This is a threat that can be carried out at any time. The charities got a two-year extension from the Americans to be monitored. The deadline expired in August, and that means at any moment a Haredi charity may find itself rejected by the American financial system.
LOSTMESSIAH 
I remember when we 1st returned to Australia in 1984, I was told by the administrator of a certain institution (we were friendly, it was a matter-of-fact discussion, not whistle-blowing, just came up in the conversation as to the ways things were!) that donors could give $10,000 & get a receipt for $100,000. Years later, there were murmuring in the Jewish press, which of course never went anywhere, that the leader of this institution ran “loose” books, which didn’t totally balance properly. BTW, in Australia, religious institutions had(/have?) very relaxed reporting rules as opposed to regular institutions. So “high-risk” is probably a soft term for what’s going on…
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