Israeli Banks Accused of Profiting from Undocumented Worker Transfers
Israel's banks and currency exchanges are accused of profiting from undocumented foreign workers. Industry leaders claim financial institutions facilitate 450 million NIS in monthly untaxed transfers.
The phenomenon of undocumented foreign workers in Israel continues to expand. According to Hila Ben Yitzhak, CEO of the association of foreign manpower corporations in the construction sector, the financial institutions tasked with preventing money laundering—primarily commercial banks and currency exchange businesses (change places)—are actively profiting from it.
"Banks and currency exchanges are facilitating money transfers for illegal foreign workers and earning commissions on black money. They are doing nothing to stop the phenomenon of undocumented foreign workers in Israel."
Scale of the Undocumented Workforce
Currently, approximately 80,000 foreign nationals are employed in Israel without legal permits. This figure comprises:
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About 41,000 undocumented workers across all sectors (including 14,000 in the construction industry);
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Around 17,000 undocumented migrants from Judea and Samaria;
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Approximately 22,000 tourists working without a valid visa.
Beyond the legal violations, the Israeli economy suffers massive losses. Hila Ben Yitzhak estimates that the employment of these workers deprives the state of approximately 1 billion NIS annually in lost income tax, national insurance payments, foreign worker levies, and health taxes.
According to her data, the 41,000 undocumented workers (excluding tourists and West Bank migrants) transfer approximately 450 million NIS abroad every month from their undeclared wages.
Regulatory Double Standards
Hila Ben Yitzhak highlights a stark disparity between the strict regulations imposed on Israeli citizens and the ease with which undocumented workers transfer funds. While citizens face rigorous scrutiny and must provide detailed explanations for unusual deposits, undocumented workers operate with virtually no oversight.
This issue was recently debated in the Knesset during a session of the Special Committee on Foreign Workers, chaired by MK Hava Eti Atia. The discussion exposed what was described as a "systemic and non-accidental failure" by banks and currency exchanges, which fail to verify whether the sender holds a valid work visa.
Consequently, foreign manpower corporations in the construction sector have petitioned the Supervisor of Banks. They demand a directive requiring banks to verify a valid residency permit before processing any financial transfer by a foreign worker.
"Banks and currency exchanges hold the greatest power to stop this phenomenon. However, they refrain from doing so because every transaction generates revenue for them, leaving them with zero incentive to halt it."
