Money-laundering inquiry at Israel's largest bank

 

Israeli police are investigating suspected money laundering worth hundreds of millions of dollars at the country's largest bank.

A year-long investigation of bank staff and customers a Tel Aviv branch of Bank Hapoalim led to arrests today. Police and the Bank of Israel said the case focused on a single branch as well as the Bank Hapoalim Trust.

Police spokesman Gil Kleiman said 22 people from the Tel Aviv branch and the trust company were arrested or detained for questioning. No one has been charged.

"This is very, very big," Mr Kleiman said.

He said funds from a number of countries passed through the branch for the purposes of money laundering, although he would only identify France. He said Israeli authorities were in contact with their French counterparts.

Police were checking more than 80 bank accounts linked to 170 customers - both individuals and companies, some from outside Israel, Mr Kleiman said.

While authorities stressed the investigation underscored Israel's recent efforts to combat money laundering, analysts said it was a setback.

"Global investors will see this as a negative for the Israeli banking system," said Eyal Hevroni, a banking analyst at the Psagot Ofek brokerage. Israel was removed from the OECD's money laundering blacklist in 2002 after tightening scrutiny over financial transactions.