Following a few mild words of dissent by Congresswoman Ilhan Omar, the US House of Representatives was almost united in affirming the special relationship between Israel and the US. See, for ex. So how is “our most reliable and most important ally” treating us? If ‘our’ includes the US treasury, the answer is that Israel’s banks have been accused of and have admitted to actively colluding with wealthy US taxpayers to avoid US taxes.
On March 12, Israel’s third largest bank, Mizrahi Tefahot, agreed to pay $195 million to the United States to settle charges that the bank knowingly aided tax evasion by US citizens from 2002 until 2012.
Israel’s largest bank, Leumi paid a $400 million dollar fine for similar “criminal activity” that spanned the period from at least 2000 to 2011. Hapoalim, Israel’s second largest bank is presently negotiating a settlement with the US Justice Department. The total settlement from all three banks will amount to over $1 billion.
As conceded by the banks, these tax avoidance schemes have been going on for decades. Israel’s Supervisor of Banks, Hedva Ber, noted the longevity of this practice: “Twenty years ago, Israeli banks did not ask customers about the source of their money and did not ask if they had paid taxes or not.” But the issue is not limited to banks failing to inquire about the source of funds, these admissions of actively aiding tax evasion show that “Israeli banks…..for decades helped Diaspora Jews evade taxes and launder money on a major scale.”
According to Hevda Ber, for many years Israeli banks provided essentially the same services to foreigners that Swiss banks gave, minus Switzerland’s banking secrecy laws. Actually, according to the settlements and to criminal cases against US taxpayers, Israel’s banks not only did indeed offer American customers secrecy for bank accounts, (Leumi admitted to failing to send statements to the US addresses of over 2400 customers) but also provided ways for US citizens to bring untaxed income back to the US without paying US taxes.