US embassy cable - 04TELAVIV1561

C O N F I D E N T I A L TEL AVIV 001561 
 
SIPDIS 
 
NEA FOR BURNS/SATTERFIELD 
EB FOR WAYNE 
NSC FOR ABRAMS/DANIN/KIFAYAT 
 
E.O. 12958: DECL: 03/11/2014 
TAGS: KWBG, EFIN, KPAL, IS, COUNTERTERRORISM, ISRAELI-PALESTINIAN AFFAIRS 
SUBJECT: ISRAELI FIU LEFT OUT OF RAMALLAH BANK OPERATION 
 
REF: A. TEL AVIV 1413 
 
     B. TEL AVIV 1392 
 
Classified By: Deputy Chief of Mission Richard LeBaron for reasons 1.4 
(b) and (d). 
 
This message has been cleared by ConGen Jerusalem. 
 
1.  (C) Summary:  The Director of the Israeli Money 
Laundering Prohibition Authority (IMPA), Yehuda Shaffer, told 
econoff on March 10 that the Israeli financial intelligence 
unit (FIU) was left out of the Shin Bet/IDF raid on the 
Palestinian banks on February 24.  Shaffer claimed the FIU 
was only given information about the suspected accounts after 
the raid.  Shaffer was confident that the raids were 
justified, however, he was disappointed that his unit was not 
allowed to contribute information until after the fact. 
Shaffer said if the GOI adopted provisions similar to the 
U.S. "PATRIOT Act," the Ministry of Justice could have seized 
the money from the correspondent accounts of the two banks in 
Israel, rather than conducting a military raid on the bank's 
branches in Ramallah.  Shaffer reiterated his unit's 
willingness to work with the Palestinian Monetary Authority 
and he is awaiting word from the PA.  End summary. 
 
2.  (C) In a meeting with the IMPA on March 10, the Director, 
Yehuda Shaffer, told econoff that contrary to many peoples' 
expectations, the FIU played no role in the lead-up to the 
IDF/Shin Bet raids in Ramallah two weeks ago.  Shaffer said, 
according to information that he has received, the money 
seized by the raid was transmitted directly from Jordan to 
the accounts in the West Bank.  Shaffer added that the money 
never passed through the Israeli banking system and therefore 
did not pass through the FIU's monitoring network.  When 
asked whether IMPA was given a chance by the Shin Bet to 
confirm whether this was true, Shaffer responded that they 
were only given the account information after the raid. 
Shaffer said that this was a purely security service/military 
operation and therefore the IMPA was left out.  Shaffer 
believed this was an unfortunate choice because it is 
possible that the IMPA could have traced other funds to the 
suspected accounts and provided greater information to the 
Shin Bet and the IDF.  In Shaffer's opinion it is highly 
probable that some of the accounts in question have received 
funding through Israeli correspondent banks. 
 
3.  (C) Shaffer opined that even if the IMPA and Ministry of 
Justice played a larger role in this operation there was 
little they could have done to seize the funds in Israel, 
since the funds did not transit Israeli banks.  Shaffer said 
that unlike the U.S., Israeli law prohibits the government 
from seizing funds from foreign banks' correspondent 
accounts.  Shaffer said that had the GOI had terrorist 
financing legislation similar to the "PATRIOT Act" in effect, 
they could have seized the funds from the banks correspondent 
accounts in Israel, rather than by conducting a military 
style raid.  Shaffer said that the GOI has been reluctant to 
enact such a law because of the potential sovereignty issues 
raised when a country seizes the assets of another country's 
banks.  Shaffer remarked that "the U.S. can do it because 
nobody can afford not to do business with American banks, but 
Israel is only a little country."  Shaffer said that from a 
law enforcement perspective he hopes that the U.S. will 
encourage Israel to adopt such a law. 
 
4.  (C) Econoff informed Shaffer that ConGen Jerusalem had 
passed his contact information to the Palestinian Monetary 
Authority (PMA).  Shaffer said that he was happy to hear that 
the PA is interested in improving cooperation on terrorist 
financing and that he remains committed to helping them in 
any way possible.  Shaffer said he has not heard from the PMA. 
 
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