In response, Ms. Sadi Mantin responded: "The issue has surfaced again due to a lawyer's letter. I sent it yesterday and attached it again. About a month ago, the customer was at the branch and was not given the letter, as he asked the administration for an orderly list of documents, and we received documents that did not match the bank's requirements."
At this point in time and in the context of this correspondence, I find it necessary to stop the chronological review once again and to emphasize - first of all, from the correspondence it emerges that there are documents that were not presented as part of document discovery - thus, the correspondence indicates the existence of a CRM system in which inquiries to the bank's customers are documented. At the same time, full documentation (as opposed to a single document that was attached to Mr. Lotem's affidavit) from within the system was not presented in the framework of the legal proceeding, contrary to the document disclosure order that was issued and the document disclosure affidavit that was submitted by the bank. Moreover, in this context as well, I will reiterate the bank's failure to testify with Ms. Sadi Mantin Sigal and Mr. Gabbay Chen, who, as it emerges from the correspondence, are at the center of the bank's decision-making - to the tribe or to the right to relate to the plaintiffs. Moreover, the correspondence contains additional documentation that a decision was made even earlier, and that the bank actually applied for documents after its decision had already been made. In addition, as I noted above, there is no documentation of the transfer of the documents that were forwarded by the customers to compliance, and apparently not for good reason - from this latest correspondence, it emerges that the Bank's Compliance Department is not at all informed that the Bank, at its front vis-à-vis the customer, is requesting documents, contrary to the Bank's decision to close the accounts. To all of the above, it should be added that the bank even chose not to present the closing letter, which emerges from the correspondence drafted a month earlier.
- As can be seen from the bank's internal correspondence, the internal correspondence contains details of documents and information that were requested from customers and were not received or answered. Moreover, it should be recalled that the directive of the Bank's Compliance Department of December 1, 2016 (which was quoted in paragraph 48 above of the judgment) was that the branch must specify which documents were required by the customers and were not forwarded by them. Notwithstanding all of the above, on January 18, 2017, the bank found that it was necessary to send the plaintiffs a notice of closure in the following terms:
"1. As we have stated on a number of different occasions, the manner in which the account is managed is inconsistent with the customary conduct of the bank for such an account and with your declarations when opening the accounts.
- Your client was asked by us to provide sufficient explanations and details for the nature of the activity in the account, which includes unexplained receipts and high activity of cash deposits, and the explanations provided by him after multiple inquiries and only partially do not satisfy us. It should be emphasized that your client received a detailed and accurate list from us and did not comply with it at all."
Our eyes see that first, contrary to the position of compliance, and although the internal correspondence ostensibly contains a list of demands that were addressed to the plaintiffs and which were not fulfilled by them, the bank found that it was necessary to convey to its customers a closing notice in the framework of which there is no specific detail, but only general claims. Even worse, as part of the bank's claims against the plaintiffs in the framework of this letter, it was claimed that there was "high activity of cash deposits" in the accounts, but there is no dispute that there was no high activity in the accounts as claimed, i.e., this claim has no substance [see Lotem's testimony at the hearing on May 15, 2018, on page 81, lines 1-3, and the testimony of the branch manager, Mr. Shaulson, dated May 15, 2018, on page 135, lines 1-16]. This letter, which is not detailed and contains an incorrect fact that serves as the basis for closing the account, constitutes further support that the Bank formulated its decision regarding the closure of the account and that its conduct from the date of the decision onwards was intended solely to justify it.
- In response to this letter, in its letter of January 19, 2017, the bank was asked by Toledano to clarify any information that had not been received. As a result, there is documentation of correspondence between the officers of the bank in which the list of required documents is formulated, following which a letter was sent on January 24, 2017, to Mr. Toledano's attorney, in whose preamble the erroneous claim is again made, according to which there is a high level of activity of cash deposits, and in the framework of which a list of required documents is detailed as follows:
"A. A detailed description of the activities of Toiga Media in tax appeals and Toiga Online in tax appeals in Israel and abroad. Areas of Practice, Client List, Supplier List Approved and Verified by a Lawyer.
- For each transferee to the company's accounts or to the private account - a detailed field of activity, an explanation of who the end customers are, in which countries they work, in which countries the customers are located, a valid license to operate in that country, for receipts coming from Fargonex/Hexagon in addition to the requested documents, a detailed list of the controlling shareholders is required. and a compliance policy document detailing how to avoid operating in enemy countries and countries under sanctions and a full list of shareholders.
- Form 901.15 Confirmation of Payment of Tax in respect of each transferring company.
- For the receipt of a dividend in the private account - in addition to the requested documents, the company's accountant's certificate of the distribution of the dividend and the financial statements of the company from which the dividend is derived.
- In response to this request, on February 9, 2017, the plaintiffs sent a letter from the Herzog Fox & Neeman law firm dated February 7, 2017. At this stage, I will note that the letter was not signed by a specific lawyer, but is the subject of a signature and stamp of the law firm. The letter details the list of the plaintiffs' clients, which are attached: copies of the agreements with them, licenses and details of the holding of shares in Toiga and Paragon EX. In addition, with respect to each company to which the companies provide services, information regarding its address, its shareholders and the details of its customers is transmitted. Thus, as for Realentco, it was written that its customers are: "Retail customers from European countries (England, France, Germany, Spain, etc.) of the company have a valid license from the CYSEC website. A similar wording was also written regarding the MPF. As far as UFX GLOBAL is concerned, it is stated that its clients are retail clients from outside European countries (Egypt, Jordan, Iceland, etc.). In addition, the letter was accompanied by the tax certificates (which had already been attached in the past) as well as the full policy documents of all the companies-customers regarding their policies regarding risk and protection with regard to money laundering and the prevention of terrorism.
- As for Toledano's account, on February 16, 2017, Toledano forwarded a letter dated February 9, 2017 from the Herzog Fox & Neeman law firm (which was also signed by the law firm and not by a specific lawyer). In the framework of this letter, it is clarified that the client of the law firm - Paragon EX - has fulfilled its hand to provide information and in accordance with it: Haim Toledano holds the company's shares in three ways - he is the registered owner of 3,346 shares, 2,180 shares are held in trust for him by the Eyal Shenhav Trust, and 3,920 shares are held in trust for him by the company Collecting Management Services and Trust in a Tax Appeal - the latter holding stems from Mr. Toledano being an employee of the Hexagon company, which is fully held by Paragon EX. The letter also provided information regarding the decision of the Board of Directors of Paragon EX dated November 17, 2016 regarding the distribution of dividends and the rate of dividend to which Haim Toledano is entitled, in respect of each such group of shares. In addition, it is explained that in respect of the dividend deriving from the shares held in trust by the Isuf company, withholding tax is deducted, whereas with regard to the shares registered in Toledano's name personally, Mr. Toledano is obligated to settle the tax, and in this regard, it was reported that his lawyer approached him in order to receive a voucher for payment. It was also noted that the dividend payment related to Toledano's work at the Hexagon Company was coordinated by the Hexagon Company.
Attached to this letter was a letter dated November 24, 2016 written by Adv. Tal Yitzhak Ron - which revolved around Paragon E X and in the framework of which it was written that in accordance with the information provided to the lawyer by his client Paragon EX, and to the best of the knowledge of Paragon EX, the activity carried out in all of the company's bank accounts is reported to the tax authorities as required and in accordance with any relevant law. In addition, Paragon EX reports for 2015 were attached, which include a statement by the Board of Directors, the Company's auditor, financial statements, attesting to income and expenses, and clarifications in which information regarding the Company and its activities is also detailed. This includes information that the company was founded on February 12, 2008 in the Virgin Islands and is based in the Isles of Man, that the company is engaged in the development and marketing of an advanced forex trading platform. It was also noted that the Paragon EX Group, which also includes the company's subsidiaries, provides marketing, sales and support services to companies in the field of online forex trading. Among the companies mentioned in the class are the plaintiff companies. I will note that in the financial statements attached to the letter, there is documentation that on July 5, 2015, the company purchased 100% of the shares in MPF Global , which is located in Cyprus.