The bank has requested indemnification in the event it is prosecuted for offenses under money laundering or anti-terrorism legislation.
The government is to indemnify the Postal Bank against future prosecutions arising out of the provision of banking services to banks in the Palestinian Authority (PA). Officials are currently thrashing out the extent of the indemnification and the manner in which it will be provided with Ministry of Finance Accountant General Shuki Oren. Israel Post Company Ltd. director general Avi Hochman has made it clear that without the guarantee of full indemnification by the state, Israel Post would not provide banking services to Palestinian banks. The Postal Bank has requested indemnification in the event it is prosecuted for offenses under the Prohibition on Money Laundering Law (5670-2000), or the Prohibition on Terrorist Financing Law (5765-2004).
The Postal Bank, which operates as part of the state-owned Israel Post, is a member of the interbank clearing system, clearing tens of millions of checks a year. Last November, the bank was asked by the Ministry of Finance and the Bank of Israel to provide correspondent banking services to banks in the PA. The request was made after Bank Hapoalim (LSE: 80OA; TASE: POLI) announced in September that it was ending its services to banks in the Gaza Strip, out of the fear that it might inadvertently be funding terrorism and thereby breaking the law that prohibits this. Israel Discount Bank (TASE: DSCT) followed suit in October.
A spokesperson for the Ministry of Finance said in response, "The government and the Postal Bank are holding discussions to reach agreement on the terms for the provision of certain services to the PA. So far no agreement has been reached."
Published by Globes [online], Israel business news - www.globes-online.com - on May 11, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008