The amendment to the law governing terrorism financing and money laundering creates new obligations for lawyers and accountants to scrutinize the identity and business purposes of their clients.
The Justice Ministry implemented on Wednesday an amendment to a law that places heavy obligations on lawyers and accountants dealing with possible financing of terrorism and money laundering.
The amendment to the 2000 law governing terrorism financing and money laundering issues creates new obligations for lawyers and accountants to scrutinize the identity and business purposes of their clients in at least five distinct areas.
These areas are real estate; the buying and selling of a business; administration and operation of assets and funds; the handling of funds relating to corporate administration; and establishing corporations or trusts.
These obligations apply to “every lawyer and accountant who undertake or are requested to undertake one of the actions listed” in the amendment for a client, according to the Justice Ministry.
Essentially, the obligations require lawyers to dig deeper into their clients’ interests in making a given deal happen and in the financial methods their clients use to carry out the deal.
Also on Wednesday, the Israel Money Laundering and Terror Financing Prohibition Authority publicized official guidance for professionals to comply with the law, including giving nuts and bolts examples of deals that look legitimate but can be exploited to secretly violate the law.
Lawyers and accountants who violate the instructions to complete due diligence checks regarding their clients’ identities and purposes, even if they themselves have done nothing criminal, could face fines starting a year from now and disciplinary measures from their professional associations.
Dr. Shlomit Vagman-Ratner, the authority’s acting director, said her office viewed the amendment and guidance as crucial in getting professionals to understand the dangers in their clients’ transactions and how they could be exploited for wrongdoing by their clients for unlawful purposes.
She said her office was advancing awareness on the issue and would continue to do so.