The Bank Hapoalim money-laundering probe, which began with a giant investigation conducted by the International Crimes Unit, the Anti-Money ...

The Bank Hapoalim money-laundering probe, which began with a giant investigation conducted by the International Crimes Unit, the Anti-Money Laundering Authority and the Bank of Israel three months ago and involved the head of the bank's private banking unit, seems to be ending with a whimper.

Under an agreement reached with Tel Aviv District Judge Edna Kaplan, the state authorities have reached a compromise with Russian company March Investment, under which the company will pay NIS 35 million and its managers will not be prosecuted for money-laundering. They will though be questioned under caution about the source of the funds that flowed into their accounts.

March Investment is owned by Jewish businessman Dennis Katziv (Danny Katz), the son of a senior member in the Russian administration.

During the investigation around 24 branch employees, past and present, including Eliahu Eisdofer, the head of private banking at Hapoalim, were arrested and investigators from the International Crimes Unit said hundreds of millions of dollars had been illegally laundered through the bank over the past year.

Around 200 bank clients were also questioned. Account holders including Russian oligarchs Leonid Nevzlin and Vladimir Gusinsky, were mentioned. Accounts worth hundreds of millions of dollars were frozen. Mr Nevzlin is worth an estimated $1.3 billion and earlier this year moved to Israel, after the Russian authorities issued a warrant for his arrest on suspicion of fraud and tax evasion. He is also wanted on suspicion of soliciting the murder of members of the Gurin family during the battle for control of Yukos.

Police sources said they had evidence that senior officials in the bank knew about the laundering and chose not to report it. Indictments are expected to be issued in October.

Techniques used by the alleged launderers included depositing large sums of money into an account which would immediately flow out, in smaller amounts, to shell companies around the world, in an effort to hide the original source of the funds.

A second way was to break up large sums of money into smaller amounts deposited in separate accounts at the bank, sidestepping the rule requiring the bank to report cash transfers of more than NIS 1 million from overseas or NIS 50,000 from inside Israel, a process known as smurfing.

A third method was to deposit a large sum, take a loan of the same amount from the bank and then send the borrowed money overseas, with the loan covered by the sum that remained in the account.