Academic journal article Defense Counsel Journal

Money Laundering between States: A Comparison of International Money Laundering Control Mechanisms

Academic journal article Defense Counsel Journal

Money Laundering between States: A Comparison of International Money Laundering Control Mechanisms

Article excerpt

THE ISRAELI approach to controlling the problem of money laundering is best understood as the product of the combination of legislation and politics, both of which have undergone significant changes over the past fifty years. (1) The approach taken by the United States in its efforts to control money laundering has emerged in much the same way. Though the two countries address the problem in a similar fashion, noted discrepancies exist within the two corresponding legislative frameworks and enforcement regimes. These differences have the potential to complicate the already complex nature of money laundering prosecution. By imposing significant road blocks to prosecutors and loop-holes for perpetrators, Israel may inadvertently position itself as a haven for would be offenders.

This paper aims to show how both Israeli domestic laws and long standing Israeli political trends have influenced the investigations and prosecution of money launderers by both the United States and the greater international community. This paper argues that the best way to achieve success with international money laundering prosecutions, while maintaining Israeli cultural sovereignty, is to fortify both formal and informal international cooperation networks, especially those that attempt to bridge conflicting domestic legal structures. This paper will conclude with an assessment of the international community's response to money laundering control, detailing how tactics other than the forced statutory compliance method can be effective.

Israeli Anti-Money Laundering Law

A. Israeli Political History

In Israel's political atmosphere, one does not need not look far to find protectionist principles. Envisioned by Theodor Hertzl, and subsequently codified throughout Israeli law, Israel's mission is twofold: first, to protect the Jewish people and provide the Jewish people with a homeland, and second, to be accepted by the international community. (2) Generally, Israel's legal progenesis is best understood as a common law tradition (adopted from the British Mandate) marked with some intermingled civil law themes (adopted from the many other countries that harbored Jews during the Jewish Diaspora). The interplay between the two above mentioned goals and the two differing legal traditions have not always worked perfectly and the resulting tension has, as is illustrated by the Israeli money laundering control efforts, created problems both domestically and internationally. (3)

Upon independence, granted by the United Nations General Assembly Resolution 181, Israel was engaged in a war with all five of her neighboring countries. For over a year, from the withdrawal of British Mandatory forces on May 18, 1948 to the signing of a cease-fire with Syria on July 20, 1949, Israel was besieged on each of her borders. (4) Immediately on the heels of World War II, and in the wake of a bloody, yearlong war of independence, the acting government of the State of Israel moved to enact a body of protective laws. One of the first of such enactments, the Law of Return, was an echo of the Zionist movement led by Hertzl, himself. The Law of Return, officially enacted in 1950, granted every Jewish person in the world the right to obtain Israeli citizenship immediately upon entering the State of Israel. (5) The Law of Return initially helped the fledgling Israel state to quickly populate the country with exiled and politically persecuted Jews. (6) While this law created the legal means for creating a homeland, it also created a haven for Jewish criminals, a side effect wholly inconsistent with the goal of acceptance into the international community.

One Israeli law, pertinent to a discussion of international money laundering control is the treatment of extradition. Resembling its common law counterpart when it was first enacted, Israel's extradition policy has changed considerably over time. Israel did not enact a formal extradition statute until the mid-1950's. …

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