Israeli Capital Market Authority Tightens Fraud Prevention, Demands Review of Recent Accounts
The Israeli Capital Market Authority is intensifying efforts to combat identity theft and financial fraud by requiring regulated financial service providers to conduct comprehensive reviews of their identification and verification systems. This includes a retrospective examination of customer accounts opened in the past two years. The authority cited increasing risks of fraud, embezzlement, and identity theft within the financial system as the impetus for these measures.
In a letter sent to regulated entities on Tuesday, the authority highlighted that fraud and impersonation occur through various methods, including digital interfaces and face-to-face interactions. Techniques such as the use of forged identification documents, identity theft, social engineering, and advanced technologies were specifically mentioned. The authority warned that technological advances complicate the detection of impersonators and elevate the risk of fraudulent activity.
Financial institutions are instructed to reassess the effectiveness of their identification and verification procedures across both remote and in-person channels. This includes reviewing control mechanisms and employing technological tools to detect forged documents and perform live verification of clients. Updated policies must be presented for board approval by mid-October.
Additionally, the authority demands a thorough scan of all customer accounts opened in the last 24 months, with special attention to those opened via remote identification. This review should verify compliance with identification requirements and identify suspicious signs of fraud, impersonation, or synthetic identities. Findings, along with corrective and control measures, must be reported to the authority by November 4. The authority also requires reporting of significant fraud incidents and the steps taken in response.
These directives follow recent reports by Calcalist exposing cases where impersonators used stolen identification documents to mortgage properties of Israeli homeowners living abroad. One case involved a couple in Moscow whose apartment was mortgaged for 1.2 million shekels without their knowledge after their documents were stolen. Another involved siblings in Germany whose property was used to secure a 2 million shekel loan. Both mortgages were registered with the non-bank credit company Magen Afikim and are currently under legal dispute.
Similar allegations have surfaced in the vehicle financing sector. A Channel 12 investigation revealed dozens of claims from individuals discovering car loans taken out in their names without consent, including loans from Mifin Direct. Mifin Direct responded by emphasizing its commitment to combating fraud and improving security protocols, and announced it would cease legal actions against victims featured in the investigation.
