Full Breakdown
Undocumented Foreign Workers' Money Flows Prompt Calls for Bank Oversight
9/10/2026, 1:35:38 AM
Core Issue: Black Money Transfers via the Banking System
An examination by foreign-manpower corporations in Israel’s construction sector found that undocumented foreign workers move an estimated NIS 1 billion a year through banks and currency-exchange outlets. The investigation alleges that financial institutions earn commissions on each transfer yet take little action to stop the flow, creating a systemic breach that enables “black money” to circulate with minimal oversight.
Scale of the Problem
- Approximately 53,000 undocumented foreign workers are present in Israel, including 14,000 in construction, 17,000 entering from the West Bank, and 22,000 tourists working without valid permits.
- Employers of these workers reportedly avoid reporting about NIS 1 billion annually in income, depriving the state of income tax, National Insurance contributions, foreign-worker levies, and health taxes.
- Workers transfer roughly NIS 450 million in unreported funds abroad each month.
Calls for Regulatory Action
Hila Ben Itzhak, chief executive of the Foreign Manpower Corporations Association, appealed to the Supervisor of Banks and the Bank of Israel to require banks to record foreign workers’ valid stay permits in their systems. She argues that such a requirement would close the loophole that allows undocumented workers to move money abroad with “almost no oversight.” Ben Itzhak also urged regulators to examine how banks earn commissions from these transfers and to enforce stricter anti-money-laundering controls.
Verbatim Quote
“Banks and money exchanges have the greatest power to stop the phenomenon, but they are playing dumb and avoiding action because every financial transfer by a foreign worker is income for the banking system, and they have no incentive to stop the phenomenon,” — Ben Izhak
Implications for Financial Oversight
If banks were compelled to verify residency status before processing transfers, the estimated NIS 1 billion annual flow of unreported funds could be significantly reduced. Enhanced scrutiny would also align the treatment of undocumented workers with the obligations imposed on Israeli citizens, who must justify unusually large deposits. The call for action highlights a tension between profit motives of financial intermediaries and the state’s interest in preventing tax evasion and illicit capital movement.
