Civil Case (Center) 23921-09-21 Shai-Lee Ebenbach v. Bank Leumi Le-Israel Ltd. - part 4

Copied from Nevo

Thus, the plaintiff confirmed that she had no information as to the source of the money.

7. On July 6, 2021, the defendant replied to the plaintiff's attorney in a letter of his own, in which he asked the plaintiff for more information regarding the amount of money in Singapore and clarifications regarding her legal status, following what he had discovered about her according to various publications, including those of the Ministry of Justice.

The plaintiff's attorney responded to this request on the same day, claiming, inter alia, that the source of the funds in the account in Singapore was in the store run by the deceased and that "there is no legal proceeding against Shai Li."

8. Later on, the plaintiff was asked to answer additional questions, including – where she managed a bank account at that time, whether she requested to transfer the funds there, what was the answer to this request if it was submitted and if it was refused why.

In response, the plaintiff's attorney replied in a letter dated July 8, 2021 in the following language (this time emphasis in the original):

9. This response did not satisfy the defendant either, and on July 22, 2021, the plaintiff's attorney replied as follows:

It should be noted that in the course of the legal proceeding, it was clarified that the deceased had never been convicted, unlike the plaintiff, and that at the time of the filing of the indictment against the plaintiff, he was no longer alive.

10. The present lawsuit was filed against this decision of the bank.

The Dispute and the Main Arguments of the Parties

11. According to the plaintiff, the defendant's decision had a number of flaws that led him to an unreasonable result, which should be canceled and the defendant should be instructed to open the account for her as requested by her, and the following is a summary of what is said:
12. The deceased was never convicted, and therefore the source of funds that were his/her due to the plaintiff's conviction should not be suspected.
13. The fact that the defendant, as a banking corporation that also serves in this regard as the person in charge of the implementation of the provisions of the law, relies on Internet publications regarding legal proceedings in order to make its decisions indicates a lack of seriousness and he is not entitled to make decisions on such a shaky basis.

• The suspicion that the tax was not paid lawfully in respect of the said sum was refuted by it long ago, and evidence to that effect was also presented to the defendant.

1. The account in Singapore was opened by the deceased 13 years prior to the date of filing her application to open the account with the defendant and without her knowledge, and since the deceased died the deceased could not assist her in obtaining the required documents in relation to the source of the money, but this should not be attributed to her obligation in these circumstances.
2. By refusing to open the account for her, the defendant discriminates against the plaintiff in comparison to other convicted tax offenders (concrete examples were cited in the statement of claim).
3. A confirmation was received from the bank in Singapore, in which the money that the plaintiff wished to transfer to Israel is held in an account that will be opened in her name with the defendant, indicating that the beneficiary of this account is the deceased, and the bank operating in the OECD (Organization for Economic Co-operation and Development (OECD) is presumed to have carried out the necessary checks and verified the source of the funds.

• Since the deceased provided the bank in Singapore with his full identification details, there is no reason to suspect the source of the funds, since the deceased would not have provided his details if the money was of non-"kosher" origin.
• The defendant's refusal to open the account is unreasonable and contradicts the provisions of section 2 of the Banking Law (Customer Service), 5741-1981.

1. The defendant did not examine its policy in this matter, did not update it and did not forward the update to the Supervisor of Banks, as it is obligated to do once a year under Section 11 of the Supervisor of Banks' Directive 411: Proper Banking Conduct (Prevention of Money Laundering and Terrorist Financing and Identification of Customers) of March 6, 2017 (hereinafter: "Procedure 411", Exhibit Y. of the defendant's exhibits).

Even if the policy was approved in silence, it is unreasonable because it is sweeping and comprehensive, the burden of persuading the reasonableness of such a decision rests with the defendant, and for this purpose a vague and non-concrete concern is not enough.

1. Even according to the rules of the Financial Action Task Force (Financial Action Task Force, which manages the international fight against money laundering and terrorist financing), banks can be allowed to receive funds if the funds do not originate in a non-tax offense, while ensuring that tax forgiveness is not a means of laundering money from more serious offenses.

In this case there is no such concern, since the only explanation for the source of the funds is in the legitimate business of the deceased, for which even the strict assumption that no tax was paid was removed from the agenda.

12. In response to these claims, the bank replied that there was no flaw in its decision or conduct and that the claim should be dismissed, and the following is a summary of its arguments in a nutshell:
13. To date, the plaintiff has not provided the defendant with references regarding the source of the funds, in accordance with the debts imposed on him prior to opening such an account, and this is sufficient to bring about the rejection of her claim.
14. The defendant received information about the plaintiff's criminal record and the defendant's involvement in the same occupation for which she was convicted, in a manner that intensifies the concern that these are funds of non-"kosher" origin.

• The plaintiff's name has an account in another bank in Israel (and according to the declaration of capital she transferred, in more than one bank), and the fact that she did not contact him for the purpose of transferring the funds from abroad in a manner that would have made this claim redundant also intensifies the suspicions.

The explanation given by the plaintiff for not transferring the funds to the bank in which her account is managed – that it is a small branch that is doubtful that it will be able to cope with such an amount – is insufficient, even if for the reason that she could have requested that her account be transferred to another branch of the same bank.

1. The plaintiff's reliance on the FATF rules is misleading, since the section to which she referred deals with the transfer of funds in the framework of tax arrangements and not with the transfer of funds from foreign countries as their own, which is an action with an increased risk of money laundering in and of itself.
2. Despite the fact that the deceased was not convicted of a criminal offense, a bank is entitled to rely on the customer's own criminal record in order to refuse to open an account.
3. The examination and risk assessment is the bank's obligation in accordance with sections 23(a) and 31-33 of Procedure 411, and according to section 50 of the procedure – situations in which a customer does not respond to a bank's request to provide details and the existence of a reasonable basis that the relevant funds are related to money laundering or terrorism are among the reasonable reasons for refusing to open an account.

• In a document published by the Money Laundering and Terrorist Financing Prohibition Authority (hereinafter: the "Authority") on November 23, 2016, under the title "Red Flags in the Provision of Business Service" (Exhibit 11 of the defendant's exhibits), situations that may indicate money laundering were detailed, one of the examples being "when the source of the funds or the reason for the transfer is unknown" or when "the client provides contradictory or unreliable versions" in relation to their origin or destination, as well as when "it is known that the client has previous convictions for money laundering offenses or source offenses. Either he is under investigation for these offenses" or is connected to the parties involved in these offenses, and even when the money received "is not related to the business service provided, without a logical explanation or business logic", and in our case, the aforementioned red flags have arisen in relation to the money.
• Requiring the defendant to receive the money in question, despite the aforesaid, exposes him to various risks to his reputation and the imposition of sanctions on him.

1. There is a distinction between the weighty reasons required to close an existing account and the easier ones that can justify refraining from opening a new account, as they say.
2. In these circumstances and in accordance with the case law, the defendant's refusal is reasonable and even necessary, and in order to make the decision, he is not obligated to rely on evidence even at the level required in a civil proceeding, and administrative evidence is sufficient.
3. After I have presented the main points of the disputes between the parties, I will first review the procedural-legal framework that surrounds the proceeding before me, and then I will examine the circumstances of the case and make a decision.

The Procedural-Legal Framework

14. Section 2 of the Banking Law (Customer Service), 5741-1981 (hereinafter: "the Banking Law") provides as follows:

")a) A banking corporation shall not unreasonably refuse to provide services of the following types: