It is anticipated that 1027 individuals, presently being held in Israeli prisons, will be released next week, in exchange for the Gilad Shalit, the soldier who was kidnapped several years ago, and who has been held in the Hamas-controlled Palestinian Territory of Gaza by an undisclosed Palestinian faction. Egypt is brokered the prisoner exchange, which has reportedly been the subject of negotiations for some time.
The issue for bankers is whether any financial institution with clients who engage in international trade afford to accept these individuals as clients, in light of international counterterrorism sanctions in place. The potential penalties can be severe, and there are several questions which to date remain unanswered:
(1) A large portion of the released prisoners, whose names reportedly must be published prior to release, under Israeli law, are linked to Hamas, a designated global terrorist organisation. Will US regulators take action against financial institutions that choose to bank them ? What about regulators in other Western countries ?
(2) What about those prisoners who are members of the Palestinian Islamic Jihad, and the PFLP ?
(3) A substantial portion of those released are reportedly incarcerated for homicides committed in Israel. Are these unacceptable clients by definition, in a risk-based compliance programme ?
(4) Are you providing material support to terrorism, by banking a group whose leadership has openly stated that these individual will be going right back to their previous occupations, mainly opposition to Israeli dominion over the West Bank ?
On the other hand, on humanitarian grounds, do you not want to help these individual reintegrate themselves back into their communities. It is a difficult problem, with no apparent solution.
Israel has publicly stated that it will expel or deport some of those released, so they potentially could be appearing in Europe, or elsewhere in the Middle East, requesting to open accounts, so you may have to deal with this issue sooner rather than later; think about it.
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