Twenty-two employees of Hapoalim, one of Israel’s biggest banks, have been arrested following a year-long investigation into alleged money laundering worth hundreds of millions of pounds.

The Isaeli authorities announced the arrests after an undercover operation into a Tel Aviv branch of Hapoalim bank, one of the wealthiest financial institutions in the Jewish state, and the Bank Hapoalim Trust Co.

"Twenty-two employees are incriminated at the Hayarkon street branch on the Tel Aviv sea front and have been arrested for questioning," a police spokesman said.

He added that employees had failed to report suspicions about large sums of money being transferred abroad.

Israel was only removed from the OECD’s money laundering blacklist in 2002 after passing a law that tightened scrutiny over financial transactions.

The Bank of Israel said that Hapoalim and the entire banking system "took wide-ranging measures" to implement the law.

"This investigation is certainly an example of the state of Israel’s firm stance on enforcing the law against money laundering," Yehuda Scheffer, head of the money-laundering branch of the Justice Ministry, told Israel Radio.

A police statement said: "evidence was accumulated apparently indicating that offences have been committed against the Prohibition on Money Laundering Law by some of the customers, staff and managers of the (Hapoalim) branch and the Trust Co.

"It is suspected that the sums involved in this illegal activity amounted to several hundred million dollars and involved various parties abroad," it added.

Hapoalim said in a statement it had ordered its employees to cooperate with investigators.

"The inspections at Bank Hapoalim alongside the police investigation brought to light findings that appeared to constitute exceptional activity that bypassed the management team and the controls practiced by Bank Hapoalim," police and the central bank said.

Times Recommends

• Toyota recalls 437,000 cars including Lexus
• Myners says bonuses are bleeding pension funds
• Japanese company faked safety reports on seats