Illegal Workers Funnel $250 Million Monthly Abroad via Banks

An estimated NIS 1 billion ($250 million) is transferred out of Israel annually through the financial system by undocumented foreign workers, according to a probe by foreign labor contracting companies. These companies have appealed to banking regulators and the Bank of Israel to investigate the phenomenon, alleging that banks profit from these illicit transfers without taking action to stop them.

Currently, Israel hosts 53,000 undocumented foreign workers. Of these, 14,000 are employed in the construction sector, 17,000 are infiltrators from the Palestinian territories, and 22,000 are tourists working without valid permits. These workers collectively send approximately NIS 450 million ($112.5 million) abroad each month, unreported to tax authorities. This evasion deprives the state of revenue from income tax, national insurance, foreign worker levies, and health taxes.

Foreign labor contracting companies have urged the Supervisor of Banks to instruct banks to verify the validity of foreign workers' stay permits through their systems, thereby preventing the loophole used for illicit money transfers. "Banks and currency exchange services have the greatest power to stop this phenomenon, but they are acting shortsightedly and avoiding action because every money transfer by a foreign worker is income for the banking system, and they have no incentive to stop it," stated Hila Ben Yitzhak, CEO of the contracting companies' umbrella organization.

Ben Yitzhak further explained that while Israeli citizens making unusual deposits face extensive checks, undocumented foreign workers can transfer funds abroad with minimal oversight. She emphasized that banks and currency exchange services not only fail to halt this activity but have a financial interest in continuing to facilitate these transfers for the commissions they earn.

The issue of employing foreign workers was recently discussed in a special Knesset committee. The committee revealed a systemic failure by the banking and currency exchange sectors, which reportedly do not perform basic checks, such as verifying if the sender possesses a valid work permit in Israel.