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