Frozen money on Israeli bank accounts for foreign residents

Frozen money on 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 the illegal activity), the banks in Israel are required, In general, to report about accounts belonging to nonresidents in Israel.

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 issued.

 

Do Bank Customers, Foreign Residents, Need to Sign?

Therefore, all foreign resident clients of any Bank in Israel needs to sort this statement and declare properly about 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 in 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, belonging 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, the 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 transfer information

The countries led by the US has cooperated widely between themself (the USA, Israel, EU), 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

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, a law firm deals with lawsuits against banks, the tax authority, international taxation, and asset forfeiture. Contact us with any questions and we will be happy to assist.

Email: [email protected], Phone: +972-9-8669556, +972-3-5507155.

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Eli Shimony Attorneys-at-Law specializes in the fields of Israeli civil – commercial and intellectual property law. Our firm deals with consultation and legal representations for transactions and contracts. In addition, our firm deals with providing consultation and managing intellectual property cases such as: registration of trademarks, registration of patents in Israel, protection of copyright and commercial design, consulting businesses with intellectual property and representing them in court.

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