"Under these circumstances, you are required by us to close the accounts. Beyond the letter of the law, we are willing to give your client 14 days to organize and he is asked to reduce his activity accordingly and to organize to close the account. If he does not do so by April 3, 2017, we will be forced to stop the activity in the account without further notice."
(hereinafter and hereinafter: "Notice of Closure").
- In respect of the notice of closure and also in respect of the conduct between the bank and the plaintiffs that preceded it, the claims that are the subject of this judgment were filed.
The arguments of the parties - in summary;
- First of all, I will turn to the details of the parties' arguments, I will preface and note that the starting point for the discussion (which will be discussed at length later) is that a banking corporation is obligated to provide banking services to its customers, unless its refusal to provide such service is reasonable. As such, it was agreed that the bank, even though it is the defendant, would precede the summary of its arguments to the plaintiffs' summaries. Therefore, and accordingly, the bank's arguments will be detailed first.
- The bank, on one side of the barricade, begins by referring to the significant debts imposed on the banking corporations as part of the war on money laundering and terrorism. Thus, as those who control the financial activity in the banking system, the banks have been placed at the forefront of the struggle and have been subjected to obligations relating to the control, monitoring, supervision, and reporting of their customers, in the event that their activity is suspected. The Bank further points out that within the framework of the provisions of the law and the relevant procedures that apply to its operation, a customer's failure to provide the bank with details required by it in order to fulfill the provisions of the law, as well as a reasonable basis to assume that a certain action is related to money laundering or terrorist financing, will establish a reason for the bank's reasonable refusal to provide service.
From the general to the specific, the bank argues that the plaintiffs' activity was subject to many red flags that raised suspicions of illegal activity, suspicions that the plaintiffs, who are the bank's customers, were unable to remove, given that they ceased to present to the bank documents that were required by it. Among other things, the Bank refers to the fact that there are two companies called Toiga whose activities are identical and for which no convincing explanation has been given for the establishment of both companies under the same company; THAT THE TWO COMPANIES ARE SUBSIDIARIES OF PARAGON E-EX, WHOSE PLACE OF INCORPORATION IS IN THE BRITISH VIRGIN ISLANDS AND WHOSE PLACE OF RESIDENCE IS IN THE ISLAND OF MAN, BOTH OF WHICH ARE RECOGNIZED AS OFF-SHORE COUNTRIES; THE FACT THAT THE PLAINTIFFS HAVE NOT CLARIFIED THEIR ACTIVITIES AS WELL AS THE ACTIVITIES OF PARAGON E-EX; THE STRUCTURE OF HOLDINGS IN THE COMPANIES IS COMPLEX WITH SOME OF THE SHARES HELD IN A TRUST FOR WHICH THE NEED HAS NOT BEEN EXPLAINED; THE INCORPORATION OF PLAINTIFFS' CLIENTS IN THE OFFSHORE COUNTRIES - Belize Vanuatu and their office registration in Cyprus; the lack of detailed information regarding the end customers of the plaintiffs' customers; The lack of explanation for the fact that the plaintiffs stopped working with UFX TRADE and switched to working with UFX GLOBAL - all given that this is in fact the exact same client held by the same shareholder, working from the same place and employing the same employees; a connection between the plaintiffs and their clients as it became clear that one of the clients - UFX was initially established by some of the plaintiffs' founders and Paragon - information that was hidden from the bank; and investigations and criminal proceedings being conducted against the owners of the rights to sign the accounts, including against Mr. Toledano, On suspicion of tax evasion amounting to millions of shekels through the use of foreign companies and tax havens.