Title: Controversy Surrounds Allegations of Money Laundering in Ultra-Orthodox Community
Subtitle: Bank Mizrahi Tefahot Faces Uproar Following Tweet Revealing Mortgage Document
Date: August 8, 2023
In a tweet that surfaced today, Naor Narkis, head of the “Israel Naura” movement, has sparked outrage by sharing a document from Bank Mizrahi Tefahot that allegedly reveals a money laundering scheme in the ultra-Orthodox community. The document suggests that obtaining a mortgage for purchasing an apartment in this community requires an income affidavit signed by a rabbinic court or a lawyer.
According to Narkis, this system enables the laundering of black capital within the ultra-Orthodox society through non-profit organizations. He claims that many families in this community have one regular job with a paycheck, but also work a second job involving cash transactions that remain unreported to tax authorities.
To secure a mortgage, individuals must demonstrate high incomes to the bank. However, Narkis points out that these incomes are often derived from GMC funds or kollelim studies, rather than regular paychecks. Consequently, lending banks face the challenge of ensuring that these incomes are reliable and sustained throughout the life of the loan. The income affidavits are seen by some as a way to address this issue. However, Narkis alleges that these funds are, in fact, used to launder black capital, further exacerbating the problem.
Bank Mizrahi Tefahot has responded to the allegations, explaining that due to the unique earning characteristics of the ultra-Orthodox society, the bank takes into account household income, including income from kollel studies. The bank emphasizes that statements from several months back are required to verify the authenticity of reported earnings. Furthermore, borrowers are required to obtain an affidavit from a rabbinic court or a lawyer to confirm the regularity of their income.
The bank asserts that it is committed to assisting couples from the ultra-Orthodox community in purchasing apartments, while taking into consideration their unique needs and characteristics. Additionally, the bank assures that it adheres to sound banking practices and does not permit any form of improper or illegal conduct. As the largest bank and leader in the mortgage sector in Israel, Bank Mizrahi Tefahot emphasizes its commitment to conducting thorough and professional underwriting processes in compliance with the law and regulatory guidelines.
It is important to note that the allegations made by Naor Narkis are yet to be proven, and further investigations may be necessary to assess the veracity of these claims. The issue has sparked a broader debate about the financial practices within the ultra-Orthodox community and the role of lending institutions in ensuring transparency and accountability.
As the story develops, it remains to be seen how Bank Mizrahi Tefahot and regulators will address these serious allegations and work to maintain trust and confidence in the mortgage sector.