How unholy business thrives in the Holy Land

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The Independent Online

Money laundering in Israel has reached colossal proportions in the last few years, fuelled by the rise of Russian organised-crime since the collapse of the Soviet Union, liberal banking laws and bank secrecy policies.

Money laundering in Israel has reached colossal proportions in the last few years, fuelled by the rise of Russian organised-crime since the collapse of the Soviet Union, liberal banking laws and bank secrecy policies.

Billions of illegally acquired dollars from Russia and the former Soviet republics, South America, Africa and Europe have passed through Israel in the last few years, securing its status as one of the world's leading money laundries.

Israel's police believe Russian gangsters are taking advantage of the money-transfer laws aimed at attracting Jewish people to the country, to deposit profits and launder funds. Their operations include narcotics and prostitution rackets, bribes and cream-offs from government funds and loans. But they also involve the winnings from a massive asset-stripping exercise that began under the former president Mikhail Gorbachev and has been underway since, turning Russia into a kleptocracy in which corruption runs from the top to the bottom of the society. They are helped by the 1 million former Soviet citizens living in Israel who have arrived since 1991.

Earlier this year a Chechen was arrested for reportedly trying to open an Israeli account with $50m (£33m) in Venezuelan cheques. Last summer an Israeli mobster was convicted in Florida of running a money-laundering business for a Colombian cartel, prompting worries in Israel about recycled cocaine money. The businessman Gregory Lerner notoriously admitted defrauding Russian banks of $48m (£32m), which he used to try to open a bank in Israel. He was fined $5m (£3.3m), not for bringing in stolen money but for local bribery and fraud.

Banking or spending the profits of illicit offshore enterprises has not been illegal in Israel, although moves are afoot to change this. For this reason, Israel has been considered a launderer's paradise.

Established as a safe-haven for the Jews, the country has not asked many questions about their riches. Many had fled nations that prohibited them from taking money abroad. The New York Times said about $2.5bn (£1.7m) was brought in from the former Soviet Union in the Nineties, almost no questions asked.

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