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Cablegate: Israel Amends Terrorist Finance Law to Include

VZCZCXYZ0014
PP RUEHWEB

DE RUEHTV #3585/01 3541512
ZNR UUUUU ZZH
P 201512Z DEC 07
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC PRIORITY 4689
INFO RUEHJM/AMCONSUL JERUSALEM PRIORITY 8675
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEAWJA/DEPT OF JUSTICE WASHDC PRIORITY
RUCNFB/FBI WASHDC PRIORITY

UNCLAS TEL AVIV 003585

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: PREL EFIN KTFN IS
SUBJECT: ISRAEL AMENDS TERRORIST FINANCE LAW TO INCLUDE
FOREIGN ENTITIES

1. SUMMARY: The Government of Israel (GOI) recently passed
amendments to the Prohibition on Terrorist Financing Law
allowing for the designation of foreign terrorist entities.
Until this week, the GOI only designated "domestic" terrorist
groups in the West Bank, Gaza, and surrounding countries.
The GOI will likely add entities from the United Nations
Security Council (UNSC) consolidated list and from the
Treasury Office of Foreign Assets Control (OFAC) in the
coming weeks. A recent assessment of Israel by MONEYVAL, an
organization that ensures that states comply with
international standards on money laundering and terrorist
financing, served as the impetus for overcoming previous
delays and passing the amendments. END SUMMARY.

2. On December 18, Econoff discussed amendments to Israel's
Prohibition on Terrorist Financing Law with Osnat Davidson,
General Counsel for the Counter-Terrorism Bureau of the
National Security Council (NSC). The amendments, passed on
December 17, authorize the addition of foreign entities to
the GOI list of designated terrorist groups. The changes
were delayed for several years because of procedural
differences with commercial banks on how the information
would be distributed. Davidson said the banks were deeply
involved in the drafting of the revised law, according to
which they will have three days after a designation is
announced to enter it into their systems. Davidson explained
that banks would be notified of new designations by fax and
email, and that the names would be posted on the Ministry of
Defense website.

3. The amendments determine that responsibility for preparing
briefs on the adoption of foreign terrorist organizations
rests with the NSC, which will submit a request for
designation to a ministerial committee headed by the Prime
Minister's Office. In order to adopt such a designation, the
General Counsel's Office must meet the following criteria: 1)
the terrorist group must appear formally on the watch-list of
a foreign country; 2) that determination must have been in
keeping with that nation's laws; 3) and it must meet the
threshold of "reasonable to assume" that the information is
accurate. Davidson explained that the "reasonable to assume"
threshold allows the GOI to adopt designations from friendly
countries without need for classified information -- all that
is required is an open-source explanation of whey the entity
was designated. The legal requirements for domestic
terrorist groups (which includes all organizations in
neighboring countries and the West Bank and Gaza) are
considerably higher.

4. Davidson said that the GOI would likely begin by adding
entities designated in the UNSC 1267 consolidated list of
terrorist organizations. Under Israeli domestic law, there
is no requirement for the government to abide by UNSCRs. It
is therefore important that the GOI explicit incorporate the
consolidated list under domestic law. The GOI will also be
looking to incorporate foreign terrorist entities listed by
OFAC. Davidson said her office would like to work in reverse
chronological order, beginning with the OFAC designations of
October 25. Davidson requested Econoff to contact her office
if there are specific OFAC-designated entities that deserve
urgent attention. Israeli banks already use the OFAC list
voluntarily, but will now be legally obligated to enforce and
report foreign terrorist transactions.

5. The Prohibition on Terrorist Financing Law was passed in
2005, and consolidates previous laws on domestic terrorism
first approved under the British Mandate in 1945. Davidson
noted that this law does not allow for the designation of
individuals, although individuals designated by foreign
governments can be cited under the current amendments.
Davidson believes that the entire terrorist financing law
will be overhauled within the next two years, and will
eventually allow the GOI to designate individuals directly.

6. The GOI passed the amendments partially in response to a
recent MONEYVAL assessment, which noted that Israel did not
have a legal framework for designating foreign terrorist
groups. According to Paul Landes, Legal Counsel at the
Israel Money Laundering and Terror Financing Prohibition
Authority (Israel's Financial Intelligence Unit), GOI
officials are eager for Israel's financial system to gain
recognition for being clean and well-regulated. The GOI has
expressed the desire to one day join the Financial Action
Task Force, in which MONEYVAL is an Associate Member.
According to Landes and Davidson, the issue has the attention
of the Prime Minister and the Head of Mossad, both of whom
would like to see foreign terrorist entities designated as
quickly as possible.

********************************************* ********************
Visit Embassy Tel Aviv's Classified Website:
http://www.state.sgov.gov/p/nea/telaviv

You can also access this site through the State Department's
Classified SIPRNET website.
********************************************* ********************
JONES

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