The Bank of Israel said that it will not automatically block
any account whose holders have not filled out a beneficiaries
declaration by the deadline of August 17. The Bank is
authorized to do so, but it will not.
Such accounts will be monitored. The account holders will be
asked to fill out the declaration while conducting regular
business with the bank in the coming months. Bank of Israel
officials can, however, decide that a customer is evading the
requirement to fill the declaration, or see that there is
suspicious activity in the account, in which case they may
block the account. The rule applies to private customers and
to business customers.
As of Sunday, 65 percent of private and business customers
had not filed a beneficiaries declaration for their accounts.
This means that 1.9 million account holders, based on the
total number of active bank accounts collated by the Bank of
Israel. The Prohibition on Money Laundering Law (5760-2000)
provides that any owner of an account must file a written
statement declaring if any other parties have a beneficial
interest in the assets in the account. It is not illegal for
there to be such parties. It is just that, as part of the
fight against illegal money laundering worldwide, the
authorities must know who the other interested parties are so
they can determine that there are no illegal money laundering
activities involved.
For honest citizens, the law and the form are nothing more
than a minor annoyance. Most of their accounts are in their
own name and contain only their own money, and they merely
need to say so on the form, which is available in English and
Russian as well as Hebrew. If someone has deposited money for
his brother-in-law in an Israeli account in his name, he
merely needs to declare this on the form.
Some banks have mailed the forms to all their customers.
Others make them available in their branches, by fax or by
downloading. The forms may usually be dropped off in the
convenience boxes found in most bank branches and do not need
a trip to a teller.
There were suspicions that the Israeli banking system has
served to launder money earned in various parts of the world
in illegal ways. Often, criminals find it hard to spend their
ill-earned gains because they cannot account for the source
of the funds.
As a result, the US and the international banking systems
applied heavy pressure on Israel to introduce official
monitoring and control of money flows. This effort is one of
the results.
