Courses of Action

What are the methods of action?

Banks are required to obtain from any person seeking to open a bank account or to change ownership of a bank account (or to conduct any transactions not recorded in any client account) information, which was mostly required even prior to the Law (name, ID, passport, address, other beneficiaries in the account, persons authorized to act in the account).

Clients are also required to certify whether the account is opened for them or for another person, in order to verify the true beneficiary of the account. For accounts opened for corporations, clients are also required to provide the names of controlling shareholders of the corporation.

Reporting by transaction value

Automatic reporting, with no discretion exercised by the bank, of certain transaction types whose value exceeds a specified threshold. These are not transactions which raise concern of being related to money laundering, but in view of accumulated experience in other countries, the legislative body has decided that these should be reviewed by the Israel Money Laundering and Terror Financing Prohibition Authority.

Here are some examples:

• Cash deposit or withdrawal, in Israeli or foreign currency, valued at NIS 50,000 or more, whether or not the transaction is made in the client’s account (for transactions with high-risk countries: amounts valued at NIS 5,000 or more).
• Exchange or conversion of banknotes and coins, in Israeli or foreign currency, valued at NIS 50,000 or more.
• Transfer through a bank account, from Israel to overseas or vice versa, valued at NIS 1 million or higher, unless documentation proves that this is an import or export transaction of goods (for transactions with high-risk countries: amounts valued at NIS 5,000 or more, even if documentation proves that this is an import / export transaction of goods).

Reporting of unusual actions

Banks are required to report to the Authority regarding other client actions which the bank deems to be unusual, in view of information in its possession, that is to say, transactions that deviate from normal action patterns for such accounts.

Here are some examples:

• Withdrawal of funds or securities soon after being deposited, other than in the normal course of business and for no apparent reason.
• Frequent use of a safe deposit box by multiple persons for no apparent reason.
• Account activity which appears to be designed to circumvent the mandatory reporting by transaction value, such as a series of deposits / withdrawals valued at slightly below the reporting threshold.
• In the Bank's opinion, the account holder is managing the account on behalf of someone else, without having made a declaration to this effect.
• Activity of exceptional scope or that constitutes a significant change in account balance, for no apparent reason.

A decision to report an action as "unusual" is not taken lightly and is made by qualified persons at the bank. The Law requires the bank to appoint an officer in charge of compliance with the Law, whose roles include formulating testing and inquiry procedures for making a decision on any required reporting of unusual actions. 

Beneficiary Declaration form

The Prohibition on Money Laundering Law requires banks, among other things, to obtain a declaration from all account holders (individuals and corporations) as to whether they manage the account for themselves or for others (beneficiary/beneficiaries*).

In order to comply with the provisions of the Law, the "Beneficiary Declaration" form must be completed and signed in original form. Corporations are also required to declare who their controlling shareholders** are, if any, and to list their names and ID numbers.

Note:

• The information provided here is for general explanation purposes only and should not be relied upon for determination of legal rights and obligations.
• "Beneficiary" - for the purpose of the Prohibition on Money Laundering Law, is a person for whom or in whose favor the asset is held or a transaction involving the asset is carried out, or who has the ability to direct any transaction involving the asset, whether directly or indirectly.
• Controlling shareholder - as defined in the Securities Law, 1968:  the ability to direct the activity of the corporation, except the capacity resulting only from fulfillment of the role of director or other officer of the corporation; a person is deemed to control a corporation if they hold 50% or more of any means of control of the corporation. Means of control of the corporation - either of the following:
  • Voting right at a General Meeting of the corporation or the corresponding body of another corporation.
  • The right to appoint directors or the CEO of the corporation.