Over the past year Israeli Shortcut, which assists foreign nationals in Israel, has discovered that banks are mounting difficulties to prevent foreign citizens living in Israel from opening an Israeli bank account, even where it involves limited accounts which do not allow overdraws.
Some banks only permit opening a limited options account in one bank branch in a city, irrespective if that branch is distant from the account owner’s residence.
"It is completely irrational that a foreign national living in Israel who wants to manage his banking account has to establish his residence and livelihood based on the bank address to where he was sent," was the complaint we heard from many foreign citizens who turned to Israeli Shortcut for help. We were astonished when some told us that, "The bank required us to deposit a sum of fifty thousand shekels in cash as a condition to opening an account."
Y.F., a foreign citizen who is living in Israel, told us that he worked legally in Israel when he was younger. When he tried to take out his savings in the bank’s pension fund, the bank refused to give it to him because as a foreigner, he wasn’t allowed to open an account in their branch.
Zev Zer, Israeli Shortcut’s chairman, claims that bureaucratic hindrances such as these harm the State of Israel’s interests, and often cause residents living in Israel to return abroad.
“We believe that the Bank of Israel and Finance Minister must urgently intervene in this situation if they are interested in encouraging immigration and labor productivity among this population.
“If we make conditions easier and more accessible for foreign nationals and enable them to exercise their rights, it will encourage them to settle in our country and contribute to the country's economy.”
The banks' response to Israeli Shortcut is that the policy of designated branches for foreigners was established due to cross-border risks.
The Bank of Israel supervisor over the banks released this statement: “The Banks Ombudsman does not provide legal advice but only deals with concrete requests."
But the bank’s stringent regulations for foreigners seem spurious when Israeli citizens enjoy preferential privileges despite having the same degree of risk.
Furthermore, there are actions that banks can take against risky cross border accounts including thoroughly vetting their clients and the kind of activities they are carrying out in their bank account. Other measures they can implement include having them fill out affidavits, provide privacy and business disclosures, enforce the money laundering transparency laws and report unusual activity and terrorist financing (in the framework of knowing one’s customer).
Why should they implement measures and restrictions which do not serve the purpose they are intended for and do not appear in any regulations?