Foreign Residents Run the Gauntlet to Open a Bank Account in Israel
17.10.2017
Bank of Israel says it won’t intervene in the banks’ onerous requirements from a foreign resident residing in Israel who wants to open a bank account because they are based on the bank’s considerations of risk management.
In recent years, foreign resident residing in Israel who wants to open a bank account in Israel are hit with many restrictions and harsh conditions, many of which appear arbitrary and disproportionate in comparison to conditions available to Israelis.
They may only open accounts in specific branches which may be distant from their home, and many times are required to keep a huge deposit in the bank. Their request to open a bank account is often refused. Soldiers who had volunteered for the IDF and were given a check crossed with “to the beneficiary only” were unable to cash the check because they couldn’t open a special foreigner account. The same happened to foreign grandchildren living in Israel who were given a check by their grandparents. Israeli Shortcut has received dozens of phone calls from foreign citizens whose request to open a bank account was refused.
Today, a bank account is not a luxury but a necessity. It is nearly impossible to run one’s household income and expenses without it. The inability of foreign citizens to open a bank account in their neighborhood discriminates against them, severely hampers their acclimatization in Israel and in fact constitutes a major incentive to leave Israel and return home.
"Israeli Shortcut" corresponded with the Bank of Israel and reported the difficulties for foreigners arising from the recent bank procedures. We asked them to institute measures which would alleviate the difficult situation.
We received the Bank of Israel’s stolid reply. (See accompanying letter.) The letter notes that due to pressure from foreign governments and particularly the FATCA provisions which were legislated by the US, “financial institutions are required to identify the residency and citizenship of account owners for tax purposes and to transfer these reports to the tax authorities so they can transfer it to foreign tax authorities.” It adds that Israel has emended some of its own laws to permit sharing tax information with foreign counties and has adopted some of these laws for its own purposes.
The Bank of Israel letter emphasizes, “After these laws were adopted in Israel, the banks evaluate the risks involved in international transactions by adopting certain techniques such as specific branches that specialize in foreign citizens, and other risk assessment criteria. All these are perceived by the clients as nuisances, but they derive from risk management. The comptroller over the banks does not intervene in these decisions, except in cases where the bank’s decision was unreasonable, arbitrary, disproportionate, etc.”
After noting that violating the international provisions can elicit a penalty of up to 250,000 NIS per violation, the letter blithely offers anyone experiencing “difficulty” in their bank activities to appeal to the Public Inquiries commissioner of the Bank Comptroller or to the Bank of Israel Unit of Public Inquiries.
"Israeli Shortcut" is frankly puzzled by the Bank of Israel’s response. Our chairman Mr' Zev Zer does not doubt that the banks are acting out of serious considerations and no one can default them for giving information to tax authorities to protect their reputations and interests. Nevertheless, these reasons are not justified to cause the convoluted difficulties to the thousands who simply want to open a bank account in Israel and were refused.
When the Bank of Israel finds it necessary, they have shown themselves able to intervene in the banks despite the protests of government officials, senior bank executives and leading industrialists and economists.
We hope they will show the same consideration and intervention for the common foreign resident who needs to open a simple bank account to manage his home budget.
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In recent years, foreign resident residing in Israel who wants to open a bank account in Israel are hit with many restrictions and harsh conditions, many of which appear arbitrary and disproportionate in comparison to conditions available to Israelis.
They may only open accounts in specific branches which may be distant from their home, and many times are required to keep a huge deposit in the bank. Their request to open a bank account is often refused. Soldiers who had volunteered for the IDF and were given a check crossed with “to the beneficiary only” were unable to cash the check because they couldn’t open a special foreigner account. The same happened to foreign grandchildren living in Israel who were given a check by their grandparents. Israeli Shortcut has received dozens of phone calls from foreign citizens whose request to open a bank account was refused.
Today, a bank account is not a luxury but a necessity. It is nearly impossible to run one’s household income and expenses without it. The inability of foreign citizens to open a bank account in their neighborhood discriminates against them, severely hampers their acclimatization in Israel and in fact constitutes a major incentive to leave Israel and return home.
"Israeli Shortcut" corresponded with the Bank of Israel and reported the difficulties for foreigners arising from the recent bank procedures. We asked them to institute measures which would alleviate the difficult situation.
We received the Bank of Israel’s stolid reply. (See accompanying letter.) The letter notes that due to pressure from foreign governments and particularly the FATCA provisions which were legislated by the US, “financial institutions are required to identify the residency and citizenship of account owners for tax purposes and to transfer these reports to the tax authorities so they can transfer it to foreign tax authorities.” It adds that Israel has emended some of its own laws to permit sharing tax information with foreign counties and has adopted some of these laws for its own purposes.
The Bank of Israel letter emphasizes, “After these laws were adopted in Israel, the banks evaluate the risks involved in international transactions by adopting certain techniques such as specific branches that specialize in foreign citizens, and other risk assessment criteria. All these are perceived by the clients as nuisances, but they derive from risk management. The comptroller over the banks does not intervene in these decisions, except in cases where the bank’s decision was unreasonable, arbitrary, disproportionate, etc.”
After noting that violating the international provisions can elicit a penalty of up to 250,000 NIS per violation, the letter blithely offers anyone experiencing “difficulty” in their bank activities to appeal to the Public Inquiries commissioner of the Bank Comptroller or to the Bank of Israel Unit of Public Inquiries.
"Israeli Shortcut" is frankly puzzled by the Bank of Israel’s response. Our chairman Mr' Zev Zer does not doubt that the banks are acting out of serious considerations and no one can default them for giving information to tax authorities to protect their reputations and interests. Nevertheless, these reasons are not justified to cause the convoluted difficulties to the thousands who simply want to open a bank account in Israel and were refused.
When the Bank of Israel finds it necessary, they have shown themselves able to intervene in the banks despite the protests of government officials, senior bank executives and leading industrialists and economists.
We hope they will show the same consideration and intervention for the common foreign resident who needs to open a simple bank account to manage his home budget.
