Clients updates / Enforcement

Following the Financial Action Task Force’s announcements, the Israel Money Laundering and Terror Financing Prohibition Authority published a list of countries and jurisdictions at high risk of money laundering, terror financing, and proliferation financing.

The Israel Securities Authority is tightening enforcement on companies, especially in the cryptographic assets sector, and is scrutinizing companies’ anti-money laundering procedures and policies and their implementation.

In a paradoxical twist, the Israel Securities Authority also monitors unsupervised entities, to prevent them from exceeding their operational parameters without a license. Consequently, the ISA possesses the power to request documents and information from these entities, emphasizing the importance of responding honestly and comprehensively to such demands.

The SEC is taking a regulation by enforcement stance toward NFTs and is creating legal uncertainty in the field. Will the Israel Securities Authority follow suit?

The SEC is expanding the application of US Foreign Corrupt Practices Act provisions. It is commencing law enforcement proceedings against non-American companies operating outside the United States and against actions that merely raise concerns of acts of corruption. Companies with international operations must familiarize themselves with the FCPA’s provisions and prepare accordingly.

Law enforcement authorities in the United States are adopting a policy of lenient law enforcement measures against corporations that cooperate during investigations, document their activities, and implement compliance programs. This policy also applies to Israeli companies operating in the United States.

The Israel Securities Authority is seeking to expand its power. If its draft bill is accepted, this will have far-reaching consequences, as the ISA will have the power to investigate offenses related to fraud, bribery, money laundering, and cryptocurrencies (which the ISA considers to be securities).

Activity in the form of financial decentralization (Decentralized Finance - DeFi) does not exempt from requirements in the field of prevention of money laundering prohibition or compliance with sanctions. It turns out that DeFi is subject to the same "laws of gravity" as projects in the traditional financial industry.

The Israel Securities Authority recently published a staff position on situations it believes indicate fraudulent securities trading and which justify opening a criminal investigation.

In October 2019, the Council of the European Union adopted new rules to protect whistleblowers through a new directive.

In October 2019, the Israel State Attorney published a new guideline on its office’s policy when considering the prosecution of a corporation, as well as on how it should determine its position on the manner of punishing corporations.