Over the past decade and a half, five administrative sanctions and fines have been imposed on Mizrahi Tefahot Bank, totalling ILS 11,472,588. Alongside them stand a $195 million agreement with the United States Department of Justice and a series of class-action settlements. The only criminal conviction in all of this material is of one individual, not of the bank.
That distinction is not a formality. It is the difference between accurate reporting and defamation, and so it appears here before the figures rather than after them.
Four different things that must not be conflated
A criminal conviction is a determination by a criminal court that a person or corporation committed an offence. There is one in this register, and it is of an officer.
A financial sanction or civil fine is an administrative penalty imposed by a regulator after a hearing, without criminal proceedings and without a conviction. The bank has a right of appeal.
A settlement without admission of liability is an agreement in which a party pays or undertakes and expressly does not admit. A judgment approving a class-action settlement is not a determination on the merits.
A deferred prosecution agreement, such as the one signed in the United States in 2019, suspends the criminal proceeding and is not a conviction. That said, the admission of facts forms part of it.
Five sanctions and fines: ILS 11,472,588
All of the decisions below are against the corporation, not against an individual.
25 March 2026 — ILS 6,800,000
The sanctions committee for banking corporations found the bank in breach of four provisions of the Prohibition on Money Laundering Order: the duty to check against the list, reporting by transaction size, reporting apparently unusual transactions, and the know-your-customer process. In detail: 12 cases of failure to report unusual transactions, and a further 35 cases in which accounts with business activity were classified as private. The breaches surfaced in an audit conducted at the bank between January and June 2023.
The bank argued the breach originated in a reasonable legal interpretation. The committee rejected this:
"The bank's breach stems from a serious failure in the classification of the transactions... the bank's interpretation is not reasonable in this context"
On the failure to report, the committee held that the bank "was negligent in the exercise of its discretion" and "did not properly document, in real time, the discretion underlying the failure to report". In the bank's favour it noted the retroactive transmission of all relevant reports.
10 June 2024 — ILS 172,588
A civil fine imposed by the Supervisor of Banks, in the words of the announcement, "for the bank holding means of control in a significant real corporation at a rate exceeding that permitted under section 24a of the Banking (Licensing) Law".
6 February 2023 — ILS 700,000
This is the decision most relevant to anyone facing the bank in an enforcement proceeding. The Supervisor of Banks found the bank in breach of section 25 of Proper Conduct of Banking Business Directive 450, concerning debt collection. The breach, in the words of the decision: failure to report to the Execution Office, within seven days, receipts received from customers on account of a debt outside the office, together with reports bearing an incorrect value date and submitted late.
The original intention was ILS 1,000,000. After a hearing the sum was reduced by 30 per cent. The accompanying Bank of Israel announcement stated that the deficiencies "emerged from a proactive audit" — that is, the supervisor initiated the examination; no complaint prompted it.
Parallel sanctions were imposed at the same time on Israel Discount Bank (ILS 1,200,000) and Bank Hapoalim (ILS 850,000).
8 July 2018 — ILS 220,000, plus ILS 120,000 on Bank Yahav
The Israel Securities Authority imposed sanctions on the bank and on its subsidiary Bank Yahav for breach of the Authority's directive to licensed investment advisers and marketers, concerning an attempt to dissuade a customer from transferring management of their investment portfolio to another company. The sums were reduced by 45 per cent given the absence of prior breaches and because this was the first enforcement action on the issue.
19 September 2012 — ILS 3,800,000
The sanctions committee for banking corporations, on the basis of a Banking Supervision audit report covering operations in 2007 to 2010. Five groups of breaches: maintaining accounts for lawyers who had not completed a beneficiary declaration; failure to report unusual transactions; deficiencies and gaps in information transmitted to the Money Laundering Prohibition Authority; failure to take sufficient steps to obtain a beneficiary declaration, even where the customer was present at the branch; and reports transmitted with considerable delay.
20 January 2004 — a breach with no sanction
An item with no figure, and important precisely for that reason. The sanctions committee found that Bank HaMizrahi, alongside Bank Hapoalim and Investec Bank, had breached anti-money-laundering provisions in audits conducted in 2002: identification and verification procedures on account opening, obtaining declarations of beneficiary and controlling owner, and deficiencies in reporting. The committee confined itself to a written warning:
"Notwithstanding this, the committee confined itself to sending a written warning, and did not impose a financial sanction"
The reason given was the proximity of the breaches to the entry into force of the law and the orders. The implication for the timeline: the chain of anti-money-laundering breaches begins in 2002, not in 2012.
The single criminal conviction
Aharon Meir served as CEO of Bank HaMizrahi from November 1970 to April 1986. In April 1986 the Bejski Commission held that the heads of the banks, Meir among them, could not continue in their roles, and he resigned that month.
On appeal before a five-justice panel of the Supreme Court, CrimA 2910/94 Yafet and others v. State of Israel, two convictions stood: obtaining a thing by fraud in aggravated circumstances and false entry in corporate documents. The appeal on the first charge was allowed by majority, against the dissenting opinions of Justices Kadmi and Strasberg-Cohen. At first instance Meir had been acquitted, on limitation grounds, of securities fraud and of misleading a customer.
His sentence: two years suspended imprisonment and a fine of ILS 600,000, or six months in lieu. No actual imprisonment, unlike Ernst Yafet, who received 11 months.
The conviction concerns the regulation of bank shares. It has no connection to the acquisition of Tefahot, although Meir was also CEO at the time of that acquisition in 1980.
The judgment contains an observation by Justice Z. A. Tal worth quoting in full:
"None of those involved — among the bankers or among the state authorities — conceived that continuing the regulation might constitute a criminal offence."
He goes on to write that the state authorities encouraged and assisted the regulation, "and not, heaven forbid, out of criminal intent, but out of concern for the stability of the economy", and that the bankers and the officials "spoke in terms of what is and what is desirable, not in terms of what is permitted and what is forbidden".
The settlements
12 March 2019, $195 million. A deferred prosecution agreement with the U.S. Department of Justice: $53 million restitution, $24 million disgorgement of fees earned from U.S. taxpayers holding undeclared accounts between 2002 and 2012, and a $118 million fine. Among the conduct admitted: opening accounts under pseudonyms and through nominee entities, use of non-U.S. identification documents, and holding customers' bank mail in Israel and Switzerland rather than sending it to them.
11 May 2021, $23 million. Settlement of a derivative action against the bank's officers and directors for breach of supervisory duties that led to the American agreement. The sum was paid into the bank's coffers by the insurer, not by the officers. The settlement was approved notwithstanding the position of the Attorney General.
November 2023, approximately ILS 45 million. Settlement of a class action concerning an "emergency protection mechanism" in variable-rate housing loans: some ILS 26.2 million in restitution and some ILS 18.5 million in the value of a future discount, to around 87,000 customers. The alleged loss was about ILS 180 million. The settlement states expressly that it involves "no admission by any of them".
29 January 2025, ILS 2,226,900. Settlement of a class action concerning fees on lawyers' demand letters: separate and full charges for identical letters to joint account holders, and fees charged for letters to guarantors. Restitution of 90 per cent of the fee difference, alongside future undertakings and the appointment of a supervisor. The bank's position is recorded in the judgment: "The bank, for its part, argues that the fees were charged lawfully."
June 2014, ILS 4,850,000. The bank's share of a consent decree in the Competition Tribunal in the fee-coordination matter, out of ILS 70 million paid by the five large banks. A note that must be stated: the Antitrust Commissioner's determination of April 2009, that the banks had maintained a restrictive arrangement of information exchange on fees between 1990 and 2004, was cancelled as part of that consent decree. It must not be cited as a determination in force.
What has not been established
- Michael Zvinari, CEO from 1987 to 1989, was reported to have been dismissed at the instruction of the Supervisor of Banks against a background of losses and the Kopitz affair. The source for this is journalistic only. Neither the instruction, nor the statutory basis, nor a precise date was located. The Bank of Israel does not publish enforcement decisions from before 2004.
- The Bejski Commission report itself was not located, so what the commission said specifically about Bank HaMizrahi as an institution is not known.
- The 1975 loans affair at Bank Tefahot. The demand for an examination is documented on the front page of Davar of 31 July 1975. The outcome was not located.
- The Karmiel branch manager embezzlement, 2011. There is no conviction — the manager fled abroad and did not defend. There is a civil judgment of the Nazareth District Court of 21 October 2015 ordering him to pay ILS 6,598,335, alongside a finding that "the bank's conduct too enabled the embezzlement", for which responsibility was divided equally between the bank and the customer.
- No enforcement was found by the Privacy Protection Authority, the Tax Authority, the Capital Market Authority, or any U.S. regulator other than the Department of Justice.
What the figures say
The sanction amounts are not material against the bank's balance sheet. What is material is what recurs in the reasoning. In 2012 the finding was "reports transmitted with considerable delay". In 2023 it was failure to report within seven days, and reports with an incorrect value date. In 2026 it was that the bank "did not properly document, in real time". And in Appendix 3 to the Commission of Inquiry report, on the year 1974, that the bank "prepared no summary report at the end of the computerisation operation" and that in the process "the entire history of the account was lost".
Four decades, four different contexts, and the same point of failure: the documentation.
Sources: Banking Supervision and Bank of Israel decisions of 20.1.2004, 19.9.2012, 6.2.2023 (decision 23LM4786), 10.6.2024 and 25.3.2026. Israel Securities Authority, 8.7.2018. CrimA 2910/94 Yafet and others v. State of Israel. U.S. Department of Justice press release 19-215 of 12 March 2019. CA 56373-06-21 Bak v. Mizrahi Tefahot Bank; CA 41639-12-17 Schiff v. Mizrahi Tefahot Bank; CC 170442-12-14 Aharoni v. Mizrahi Tefahot Bank and others. Report of the Parliamentary Commission of Inquiry into the Location and Restitution of Assets of Holocaust Victims and its Appendix 3.