The banks have the duty of getting to know the customers (KYC) with whom they do business properly. This includes familiarity with the characteristics/nature of the business they conduct with and/or through the bank.In order to meet this obligation, the bank must identify its customers (including those transacting in their name) according to prescribed procedures, follow up on the transactions conducted in the accounts, identify irregular transactions, understand the essence of the transactions executed by the customers and obtain the documentation relevant to these transactions.
Following are a number of emphases derived from these obligations:
1. When opening an account, executing a transaction in the account that is not characteristic of the regular activity conducted in the account, altering the details of the accounts' owner and once in a period, one must answer the questions asked by the bank clerk and provide any documents that he requires. The clerk’s questions are intended to ensure that both the bank and the customer comply with the law/order’s requirements and are not derived from the clerk's curiosity.
The assumption is that an innocent and honest citizen who executes a transaction has no reason to conceal fundamental information from the bank with which he works. In contrast, a refusal to cooperate and answer the questions that the clerk is obliged to ask in pursuance of the law only arouses suspicion relating to the legitimacy of the transaction requested.
2. The provisions of the law in Israel determine that managing an account for a third party without declaring it (even if reference is to an immediate family member) is a criminal offense.
Consequently, the bank must be informed about any interested party in the account. I.e. who are the partners, authorized signatories, empowered, beneficiaries and the parties having "control" in the account.
3. The banks are obliged to obtain a number of details from anyone requesting to open an account or change ownership in account (or to execute transactions that are not recorded in any customer’s accounts), most of which were required even before the new law was legislated (name, identity number, passport, address, additional beneficiaries in the account, empowered in the account etc.).
4. Customers have to declare whether the account was opened for them or whether they are managing the account for a third party, in order to know who the true beneficiaries in the account are. Regarding accounts opened for corporations, the customers will also be obliged to provide the details of the parties having "control" in the corporation in order to enable full transparency.
5. The Prohibition on Money-Laundering Order has determined threshold sums, so that execution of transactions with a higher value than these triggers a mechanism for transferring automatic reports to the Israel Money-Laundering Prohibition Authority. For example, splitting up deposits raises a suspicion that the depositor is attempting to bypass the automatic reporting mechanism, even if, in fact, reference is to money originating in legal activities. The courts in Israel have determined that splitting up the money into different deposits (where the entire intention is to avoid automatic reporting) constitutes a money-laundering offense.
Therefore: Avoid any unnecessary splitting up of deposits/withdrawals.
For further details, you may consult the Israel Money-Laundering Prohibition Authority and Bank of Israel
Disclaimer
The information on this website is for explanative purposes only. It is not to be construed as a legal opinion and/or cannot be used in the framework of any legal processes.
