Frozen money in Israeli bank accounts for foreign residents
Following US legislation (FATCA – Foreign Account Compliance Law), to curb black capital, along with money laundering (tax evasion, or capital derived from illegal activity), the banks in Israel are required, In general, to report about accounts belonging to nonresidents in Israel. These regulations might cause frozen money in Israeli bank accounts for foreign residents
FATCA – Foreign Account Tax Compliance Act.
This legislation, which has been adopted by Israel and many other states, along with the US authorities, create for many people, who hold funds in Israeli banks, as nonresidents, a condition, they can not use these funds without a clear statement about the source of money.
The Bank of Israel has issued a draft procedure requiring the banks, which rely on OECD guidelines, to require their foreign customers, as mentioned, to declare that the tax on these funds has already been issued.
Do Bank Customers, Foreign Residents, Need to Sign?
Therefore, all foreign resident clients of any Bank in Israel need to sort this statement and declare properly the source of money in their account. In addition, it is necessary to sign a waiver of confidentiality, so that Israeli banks will allow transferring the information to overseas authorities.
Customers who refuse to sign these documents are labeled as “clients at risk”. Their accounts will be frozen until after laying the appropriate explanations for the source of money or transferring it according to the law.
What kind of account types of funds / foreign residents are frozen?
Following the laws, treaties, and regulations, banks are exposed to lawsuits and fines, as well as criminal proceedings. Therefore, the blocking of accounts and the freezing of funds to non-Israeli residents is carried out indiscriminately, until a declaration of the source of the funds is obtained. Therefore, even if the money in the account, belongs to a foreign resident, for 20 years, without any activity, can also be considered a risk to the bank and will be frozen until the various tax documents are received. Inheritance money, gifts, family transfers, pension payments, bank balances, deposits, and more, are all can be frozen.
Different banks, different procedures, different guidelines.
In Israel, various banks have different procedures for implementing this procedure. Israeli Banks, trying to avoid liability, cause many clients to close their accounts and take out the funds (usually after an effort). As mentioned above, freezing the account causes damage to the account holder, for the reason that the client can not use the money on his account, without any prior warning (usually).
Automatically transferred information.
The countries led by the US have cooperated widely between themself (the USA, Israel, EU), and signed treaties, which allow transferring data, automatically and without any advance requirement. Therefore, it is recommended to take deal with these accounts immediately.
Personal and immediate care for frozen money in Israeli bank accounts.
Complex and difficult, to deal with huge and bureaucratic bodies, like the Israeli banks, when the account holder is not in Israel. Legal representation, many times helps to address these issues with the banks and authorities in Israel, and effectively.
Eli Shimony – Israeli law firm represents clients on all legal matters in Israel. For any questions please contact us and we will be happy to assist.
By email: [email protected], By phone: +972-52-2769773, +972-3-5507155.
The above is only general information and does not replace legal advice which is usually necessary before taking legal proceedings.