The Prohibition on Terrorist Financing Law establishes Israel’s framework for identifying, preventing, and prosecuting the financing of terrorism. It complements the Prohibition on Money Laundering Law and explicitly aligns with FATF Recommendations, including the FATF Travel Rule, which underpins the WTR. This legislation creates binding obligations on financial institutions, service providers, and designated non-financial entities to implement measures that prevent the misuse of the financial system for terrorist financing.

Definition of Terrorist Property & Transactions

The law adopts a broad definition of terrorist property, encompassing any assets used to support or reward terrorist acts or terrorist organisations, or obtained from such acts. It also defines property transactions in an expansive manner to include transfers, brokerage, credit provision, import/export, and co-mingling of funds. This approach reflects WTR requirements that all actors in a transfer chain must have transparency over the origin and destination of funds linked to terrorism.

Prohibitions on Terrorist Financing & Associated Transactions

Sections 8 and 9 of the law criminalise property transactions intended to enable, support, finance, or reward terrorism. The scope covers direct and indirect involvement, including transactions carried out with foresight of their likely use in terrorism. There is a legal presumption of knowledge in transactions involving known terrorist activists or designated terrorist organisations unless evidence is produced to the contrary. These provisions create a compliance burden analogous to WTR expectations for monitoring and interrupting suspicious value flows.

Mandatory Reporting Obligations

The law mandates any person or entity, in the course of business, who suspects that property is terrorist in nature or linked to terrorist activity, to report the transaction to the Israel Police. Reporting obligations extend to situations involving attempted or incomplete transactions, in line with WTR’s broader framework for suspicious transaction reporting (STRs). The report must be timely, include all relevant identification and transactional data, and conform to the formats and deadlines used under the Prohibition on Money Laundering Law.

Supervisory Framework & Record Management

The Israel Money Laundering and Terror Financing Prohibition Authority (IMPA) is designated as the competent authority responsible for receiving and managing STRs submitted under this law. The law also grants parallel supervisory, record-keeping, and information-sharing responsibilities to regulatory authorities such as the Bank of Israel and sector-specific regulators. These supervisory functions mirror those required under WTR implementation frameworks, particularly regarding MVTS and correspondent banking services.

Forfeiture & Asset-Freezing Powers

The law includes comprehensive forfeiture powers for both criminal and civil proceedings. Property linked to terrorist financing may be seized and forfeited regardless of ownership status or connection to a criminal conviction, if it is demonstrated to be terrorist property or the proceeds of such. The law includes safeguards to protect innocent third parties and applies presumptions that property found in the possession of a terrorist entity is indeed terrorist property unless proven otherwise. These mechanisms reinforce WTR enforcement capabilities by removing access to the financial system for terrorist actors.

Temporary & Emergency Asset Controls

Chapters Eight and Nine provide for temporary orders and emergency asset freezes even in the absence of an indictment or criminal trial. These can be invoked to prevent imminent terrorist acts, particularly where there is no connection to Israel. The expedited use of injunctions and seizures underscores the WTR principle of timely intervention to prevent misuse of the financial system.

Link to FATF Travel Rule & Money Laundering Law

Section 48 of the law formally incorporates enforcement mechanisms under the Prohibition on Money Laundering Law into the terrorist financing regime. This includes use of the IMPA’s database, STR confidentiality provisions, administrative sanctions, and supervisory oversight. The Travel Rule’s requirement for financial institutions to include, retain, and transmit originator and beneficiary information is fully supported under these combined legal frameworks.

Conclusion: WTR Compliance Integration

The Prohibition on Terrorist Financing Law provides a robust legal and institutional framework that ensures Israel’s full alignment with Wire Transfer Regulations. It mandates traceability, reporting, supervisory oversight, and asset forfeiture in relation to funds linked to terrorism. By integrating legal presumptions, reporting duties, and data retention standards into the financial and enforcement sectors, the law ensures that wire transfer systems in Israel cannot be exploited by terrorist actors. In practice, the law operationalises WTR principles by embedding preventive and punitive tools within a tightly regulated and FATF-compliant national infrastructure.