Amid a global downturn, Israel has long been a destination for entrepreneurs and foreign investors seeking a quick exit from the global financial system.
But the country has also become a magnet for money launderers and tax evaders who are trying to avoid the high taxes and fines that come with doing business in Israel.
Now, the government is proposing new measures that would make it harder for people to invest in Israel and further punish companies that don’t meet the country’s standards.
The plan comes as Israel has been hit by a string of high-profile cases involving money laundering and tax evasion, with several high-level figures from the country implicated.
Among the most recent revelations are that Israeli authorities seized $11 billion from a Chinese businessman in 2016, and another $1 billion in May from a Saudi billionaire.
The money was allegedly used to finance the construction of a luxury hotel in Tel Aviv.
The tax evasion case has also drawn international attention.
Last week, a U.S. citizen who has been accused of laundering $5 billion for Iranian clients was arrested by the Israeli authorities.
The government has been criticized for the way it has handled the case.
“I don’t see it as a deterrent at all,” said Rabbi Daniel Leblanc, the founder of the Israel-based Hebrew University’s Center for Jewish Education.
“If I were the Israeli government, I would want to arrest them all and charge them all.”
The government said in a statement that it has “established a system to track and arrest money laundering cases and has taken measures to close loopholes in the existing legislation.”
In addition, the plan calls for the creation of a new “special agency” to oversee the registration of companies that do not meet the standards of the country, as well as an independent body that would be responsible for enforcing the law on the ground.
“The new body would be headed by a senior official who is knowledgeable in the relevant laws and regulations, with the support of the civil society,” the statement said.
The new “entity” would have to have the power to issue “bailout orders” to banks, the statement added.
The proposed legislation also includes a clause that would bar any companies that had been registered in a foreign country from operating in Israel, including ones that operate in other countries or operate in “non-financial sectors.”
“The existing law does not apply to foreign-registered companies,” the bill said.
It did not specify whether this means that the proposed law would also prohibit foreign companies from operating their businesses in Israel or would be applied to the country in which they operate.
The legislation also seeks to ban companies from buying shares in Israeli companies.
A separate proposal that would create a new tax agency for foreign companies would require the creation, within five years, of a “foreign tax” agency that would have jurisdiction over the foreign entities that were registered in Israel but did not file a financial statement with the Israeli tax authorities.
Under the bill, the “foreign entity” would also be responsible “for the taxes” of the foreign entity, and the “tax authority” would be empowered to issue a tax order to the foreign “entity.”
The new tax authority would also have the right to investigate tax evasion and “to impose sanctions on the foreign organization,” the new bill said, without giving a specific example of sanctions.
The bill also said that foreign entities could be designated as tax-evading entities by the government and that companies that have been “registered in Israel for tax purposes” would not be eligible to be listed on a foreign exchange market.
The Finance Ministry did not respond to a request for comment.