"When it comes to closing an account, which has been in operation for a long period of time (in our case, the account has been managed for about 17 years), the bank must point to weighty reasons that justify closing the account. Reasons that justify refusing to open an account may be insufficient to close it and refuse to continue its management. During the years in which the account is managed, a relationship of trust and loyalty is created between the customer and the bank and its clerks, who are exposed to the customer's business activity, his business cycle, his customers, his income and expenses flow, and a great deal of other information that can be sensitive for the purpose of continuing to manage the business. Moreover, during the operation of the account, the bank issues the customer checkbooks, through which it pays employees, suppliers, customers, and various institutions. Closing the account and relocating the activity to another bank may harm the customer's regular activity, the business he manages, and even his reputation and good name in the face of all of these."
As such, the District Court ruled in the same matter that the decision to close an active account is:
"... should be seriously considered, while giving weight to the full circumstances of the matter, including the interest of the client, which may be severely harmed. Among other things, the bank must take into account the period of time in which the account is managed, the manner in which the account has been managed since it was opened until today, the severity of the act for which the bank decided to close the account, whether it is a one-time event, or whether it is a matter of accumulation of events, the scope of activity in the account, and more. A decision that does not take into account these considerations is inconsistent with the provision of section 2 of the Law. "
- As an interim summary and summary of the aforesaid rule, the existence of red flags does not in itself lead to a restriction of activity, but rather they are related to the "know the customer" stage and the risk rating involved therein, in a manner that will lead to the taking of actions to reduce the risk, first and foremost the actions of checking and recognizing the customer, including while receiving documents. Moreover, as part of the actions to reduce the risk, the banking corporation may refuse to allow activity and may also order the closure of the customer's account, but it was determined that such refusal to provide a service will be taken only as a final step, and in any case, once two cumulative conditions have been met, one - the customer's non-compliance and the other - a reasonable basis to assume that the activity is related to money laundering or terrorism.
the decisions of the banking corporations under the court's "audit clan";
- As a complement to the review of the duties imposed on the banking corporations, their definition and limits, and given that the remedy that is the subject of the lawsuits is the cancellation of the bank's decision, i.e., intervention in its decision, I find it necessary to relate in the margins of the normative chapter to the legal precedents relating to the judicial review of the decisions of the banking corporations and the development of these rulings, in light of the changes as they have occurred in the duties imposed on the banking corporations, and in particular in light of the possible tension and contradictions between these debts.
In the first part of the normative chapter, which discusses the banking corporation's obligation to provide services, it was clarified that the basis of this duty is the unique right granted to the banking corporation to provide banking services, the power gap between the customer and the bank, and the fact that the banking service is an essential service. Given the basis for the aforesaid duty to provide service, and taking into account the fact that the banking corporations have been charged with the duty to perform functions of an administrative-public nature and indicators, and in some cases they even serve as agents for the implementation of government policy, the status of the banking corporations as quasi-public "dual substantive" entities was determined [Civil Appeal 1691/11 Leumi Mortgage Bank v. Rachel Tzubari [published in Nevo] (December 15, 2015) (hereinafter: the "Judgment in the Tzubari Case"); Opening Motion 11043-12-08 Kaplan Meat Marketing in a Tax Appeal v. Union Bank of Israel in a Tax Appeal [published in Nevo] (April 23, 2009) (hereinafter: "the judgment in the Kaplan case"); Opening Motion (District Court) 20680-02-13 Tzeker Boneh Ha-North for Construction and Renovation Works in Tax Appeal v. Bank Hapoalim in Tax Appeal [Published in Nevo] (February 21, 2013)].
- It can be said that the determination that the banking corporations are dual entities is "a thorn in it".
"The thorn" - derives from duties imposed on the banking corporations as dual entities, including the duty of trust towards their customers, the duty to provide service, as well as the duties to act fairly, reasonably, with equality, proportionality, to conduct a proper procedure vis-à-vis customers, all while observing the rules of natural justice [see the judgment in the Tzubari case; Prof. Ricardo Ben-Uliel, Banking Law (General Part), pp. 68-69; Gilad Narkis and Meirav Mor, Debts Applicable to Banks (Vol. 1). pp. 266-268; Civil Case (Tel Aviv District) 60553-06-13 Giusto Metal Business in Tax Appeal v. Bank Hapoalim in Tax Appeal [Published in Nevo] (August 7, 2013); Civil Case (Haifa District) 27289-11-13 and Eyal Canaan v. Mercantile Discount Bank in a Tax Appeal [published in Nevo] (January 19, 2014)]. The banking corporations, as dual entities, are also obligated to act transparently, as part of the basic right of the public in any democracy to receive information [High Court of Justice 7793/05 Bar-Ilan University v. National Labor Court Jerusalem, 66(3)1].