The decision-making process in the case before;
- As I noted earlier, I am of the opinion that in the case before me, there was a flaw in the decision-making process by the bank. Thus, I am of the opinion, and accordingly the analysis will be conducted below, that the bank's clarification process vis-à-vis the plaintiffs can be divided into three main chronological parts - the first - until November 2016, the second from November 2016 until the date of sending the notice of closing the accounts, and the third - during the legal proceeding.
As I will show below, I am of the opinion that in the first stage, the bank received documents from the plaintiffs to its satisfaction and accordingly allowed the continuation of the activity of their accounts without restriction; In the second stage, as a result of information about Toledano's investigations by the tax authorities, the bank made a decision regarding the closure of the accounts and its conduct from then on was improper, including that it did not allow the plaintiffs a real right of argument and persuasion, in which the plaintiffs were given the opportunity to deal with the suspicions that arose in his heart; In the third stage - in the framework of the legal proceeding, when the plaintiffs were allowed to deal with the allegations against them, the suspicions raised against them were removed, in a manner that indicates that if the plaintiffs had been given the opportunity to present their claims, information and documents, to the bank and the bank was genuinely willing to allow them to do so, the bank would not have reached a decision regarding the closure of the accounts.
- It is possible to exclude, already at this stage, from the aforesaid, Lihat, given that a review of all the requirements of the documents, as well as the claims on behalf of the bank, shows that the bank has never, throughout the proceeding, demanded a single document relating to Licht. Moreover, the bank did not raise - neither prior to the legal proceeding nor even in the framework of it - any claim relating to the suspicion regarding Licht or with respect to the activity carried out in its account, and the bank's entire claim is that this account was closed at the request of Mr. Toledano. However, the bank's version that Mr. Toledano sought to close this account was not properly detailed - including when the request to close the account was made and from whom, and all the more so that the bank did not present any evidence regarding the request to close the account, including no witness who could substantiate the claim. Moreover, the claim was denied by Mr. Toledano, who, for the avoidance of doubts, even declared that he was not interested in closing the account, and despite this, Mr. Toledano was not asked a single question regarding the Licht account. Given all of the above, with regard to the Licht account, I find it necessary to determine, already at this stage, that the bank did not meet the burden of showing that the notice of closure to Licht was for reasonable reasons (or for any real reasons) and as such, I determine that the notice of closure of Licht's account is null and void.
- The first stage is the bank's conduct until November 2016;
As for this stage, documentation and reflection of the conduct between the bank and the plaintiffs at this stage can be found in the e-mail correspondence that took place between the bank and the plaintiffs or any of them, as well as between the bank's representatives themselves - correspondence that is detailed chronologically, as will be done below, is sufficient to reflect the proceeding that took place. This correspondence was submitted in part as part of the disclosure of the documents that the bank had in the framework of the proceeding and was marked as Exhibit 1, the other part of the correspondence was attached to the affidavits of Mr. Michal Alon (with respect to the plaintiffs) or to the affidavit of Mr. Haim Toledano (with respect to his account).
- The correspondence relating to the plaintiffs' accounts:
This correspondence began in March 2016. As to this date, we will preface and note that there is no dispute about it - up to that date and for years from the date of their opening (between the years 2007 and 2009), the accounts that are the subject of the claim were managed in the same format and while the same activity took place in them [see, for example, the testimony of Mr. Lotem on behalf of the bank in the hearing of May 15, 2018, on page 24, lines 3-6]. Notwithstanding the aforesaid, despite the fact that there was no change in the manner in which the accounts were managed, as well as in the activity that took place in them, in 2016 - due to the Bank's policy on money laundering - the plaintiffs' accounts and their activity were examined by the Bank's Compliance Department [see the affidavit of Mr. Amos Lotem in paragraph 11]. As part of the examination, the plaintiffs' activity vis-à-vis foreign companies increased, and therefore, in March 2016, there was first documentation of the bank's contact with the plaintiffs through their representative, Mr. Michal Alon.
- Thus, on March 27, 2016, Dganit contacted the plaintiffs on behalf of the bank and requested that the bank be forwarded with the certificate of the accountant of the companies transferring funds to the plaintiffs, according to which taxes were paid in respect of the funds. Further to this request, and since the plaintiffs' account received a receipt in the amount of approximately $400,000, on April 12, 2016, in a notice between the bank's employees - Mr. Lotem and Deganit, it was stated that in a conversation that took place with the customer, the requirement to know that the funds received into the account were created legally and taxes were paid in respect of them as required. It was also agreed that after receiving details about the shareholders of the transferring companies and the compliance policy documents of the transferring companies, a meeting would be held with the customer to present the activity in Israel, in order for the bank to decide on how to continue operating the account. In addition, it was noted that since this is a long-standing customer, and after consultation with the Compliance Department, it was agreed that the bank would approve the receipt of the sum of $400,000 and, after the approval of a lawyer, would also approve the receipt of a receipt in the amount of $100,000, but that additional receipts for these would be conditional on receiving clarifications to the satisfaction of the bank, on the subject of money laundering and terrorist financing, regarding the activities of the transferring companies.
- From the documentation of the continuation of the correspondence [which, as aforesaid, was attached to the affidavit of Mr. Michal Alon] it appears that subsequently the plaintiffs transferred: files of anti-money laundering procedures of Rialentco and UFX TRADE; confirmation regarding the director and sole shareholder of UFX TRADE (Mr. Dennis de Young); details of the bank accounts of this company; a letter from attorney Tal Ron on behalf of UFX TRADE . Accordingly, to the best of the Company's knowledge, the Company's bank accounts are reported to the tax authorities in accordance with the relevant laws. In addition, it appears from the correspondence that the material was transferred to Mr. Amos Lotem, the Bank's compliance controller.
- It should be noted that the bank contacted the UFX company in order to obtain details about the UFX company, including its owners, business and customers, and the answer received by the plaintiffs was that in the material that was provided, including in the policy document, there are answers to all of the above, and yes, the bank was referred to the company's website in order to receive additional information about the company. For the avoidance of doubt, it was clarified, on April 19, 2016, that the owner of the company is Dennis de Young, the company's clients are received on the basis of anti-money laundering procedures that were transferred to the bank while maintaining a "know the customer" procedure that includes identifying the customers and the source of the money and a strict acceptance process that blocks prohibited countries.
In response, the bank commented on April 25, 2016 that the lawyer's certificate did not state that the company pays taxes lawfully, but that to the best of the lawyer's clients' knowledge they pay taxes, and therefore a different wording was requested. As a result, Attorney Tal Yitzhak Ron contacted the bank directly, noting that to the best of his knowledge, there is no corporate tax in Belize, but there is still a demand for reports and the company, in his understanding, meets all the legal requirements. Therefore, Adv. Ron noted that he had made an adjustment to the certificate issued by him, in order to reflect the aforesaid, including, in the new version, the lawyer confirmed that in accordance with the information presented to him, the company is registered in Belize and as such its activity is reported to the relevant authorities in Belize in accordance with the law. The lawyer further wrote, in the supplementary letter to the bank, that he believed that the document would be provided to the bank, and in response to this, Dganit dated April 27, 2016, thanked her for her cooperation and said that she would pass on the material.
- Following the aforementioned correspondence, a meeting was held on May 9, 2016 between the bank's representatives - the branch manager and the regional compliance officer - and Mr. Michal Alon. Following this meeting, between May 9, 2016 and May 15, 2016, the plaintiffs provided additional information that was required by the bank - including on May 9, 2016: confirmation from attorney Hadas Geva Medalia that as the legal advisor of Twiga Media, she confirms that Twiga Media and its controlling shareholder, Paragon EX, do not own shares in UFX TRADE, Realentco and MPF , in accordance with the documents presented to it; a screenshot showing the details of UFX in the plaintiffs' accounting system. Subsequently, on May 10, 2016, a confirmation was submitted by the accountant Meidani regarding the lawful payment of tax by UFX , and the details were attached to the April 2016 invoice.
The documents were forwarded by the bank's employee to Mr. Lotem, whose suspicion that arose in his heart, at this stage, is reflected in an internal correspondence at the bank dated May 10, 2016, and that it is necessary to know that there are no connections, including joint shareholders, between the companies, since in many cases in which he met, the overseas marketing company is in some way connected to the company in Israel.
- In light of the aforementioned suspicion, the bank contacted the plaintiffs on May 15, 2016 and commented that: "The wording of the attorney's letter is insufficient because there is no reference to the shareholders of each company. The letter also mentions that the Cypriot company does not own the transferring companies, but not the other way around."
The plaintiffs' response to this is that only confirmation was requested, according to which there is no connection between the plaintiffs and their clients, but the plaintiffs, through Mr. Michal Alon, add: "Tell me exactly what information you are missing and I will ask the customers."