Supervisor of Banking, Mr. Yair Avidan, said: “The updated directive we released today aligns the regulatory requirements of the banking system in the fight against money laundering and terrorist financing. with international standards in this area. Directive has been adapted to changes in the environment for financial activities, including technological changes and in the payments market in Israel, with the aim of establishing, as far as possible, uniform rules of the game for supervised entities . easier continuing activity for financial asset service providers who have received an authorization to operate from the Capital, Insurance and Savings Market Authority. “
The main updates to the directive are:
· Alignment of identification and authentication requirements in the provision of payment services: In recent years, the Israeli payments market has experienced accelerated development and the extent of payments made via digital means.
In this perspective, the Banking Supervision Department has aligned the requirements for identifying and authenticating customers by banking establishments with the level of risk and the characteristics of the payment activity. At a relatively basic level of activity, customers will be required to register their identifying information (name, identification number, date of birth, gender and address), checking account and payment card information with which the accounting of the payment service will be carried out and the purpose of the payment services (professional or non-commercial). In some cases, customers will be required to present a copy of a photo identification document issued by the State of Israel. In addition, banking establishments will be required to authenticate the customer’s identification data with the Population Register or with the banking establishment in which the customer’s current account is managed. As the scope of activity is relatively large and / or the characteristics of the activity are more complicated, additional identification and authentication activities will be required, similar to the requirements when opening an account routine in a banking institution, including presentation of original identification documents and face-to-face identification.
· Facilitation of the management of accounts of financial asset service providers: In order to facilitate the management of accounts of financial asset service providers in banks and with a view to the establishment of a prohibition order money laundering which will apply to these entities and which will come into force in November 2021, the banking supervision department has introduced relaxations with regard to the obligation for banks to register beneficiaries and holders control in the accounts of financial asset service providers. The relaxations will apply to the accounts of entities supervised by the Capital, Insurance and Savings Market Authority which have received from it a license to provide services on a financial asset and for which an order of. prohibition of money laundering applies to their activity. With the aim of facilitating the activity of small businesses and encouraging competition, and taking into account the imposition of an order prohibiting money laundering on providers of financial asset services, the framework for the activity of a merchant has been expanded, whereby it is possible to receive merchant acquiring services for payment card payments through an aggregator, without contracting directly with the acquiring merchant. The relaxations will remove a major hurdle that currently makes it difficult for these entities to operate in Israel’s financial system and compete in the banking system.
Alignment of the directive with international standards: A review report prepared by the Financial Action Task Force (FATF) on the State of Israel regarding the issue of AML / CFT, published in December 2018, indicated that ‘there are some differences between international standards. established on the issue and existing guidelines in Israel. In order to comply with the international standard in this area, several guidelines have been added to the directive, in particular with regard to the obligations imposed on banks when executing international transfers.
· Relaxation of identification and authentication requirements when opening a portfolio management account: So that customers who manage a current account in a banking establishment can remotely join a portfolio management service investment, it will be possible to identify the customer by technological means of identification instead of physical identification. The authentication of the client’s identity will be carried out by at least two authentication factors, as defined in the Directive on the Conduct of Banking Affairs no. 367, which deals with e-banking, and relaxations will be granted concerning the obligation of face-to-face identification and concerning the receipt of a declaration from beneficiaries with an original signature. The relaxations will be granted subject to the existence of conditions mitigating the risk, such as full matching between the beneficiaries of the portfolio management account and the beneficiaries of the existing current account.