This is not a "red flag". This is a single check which does not indicate the rule. In any case, the argument was abandoned in the bank's summaries.
- Additional articles in the Israel Hayom newspaper: In the evidentiary hearing, the bank mentioned two articles that were published close to the date of the hearing. One was published a few weeks earlier and dealt with a "police investigation" against the organization. The second article was published the weekend before the hearing. It dealt with the involvement of the 48 association in terrorism, and in the framework of it, the association in question was also mentioned. "Various publications, including this weekend, I was very surprised, I open Israel Hayom and I see an article detailing the involvement of the 48 association, which, as I mentioned, was decided to go through a process of dissolution and birth is intertwined with the article: the Al-Aqsa association and the mention of organizations, bodies and entities that constitute elements that are suspected or declared terrorists, with which the associations are active" (p. 70, paras. 24-28); "The same article from a few weeks ago that talks about a police investigation, an article from last weekend that talks about activity vis-à-vis declared bodies and terrorist bodies" (p. 71, paras. 15-17).
- These articles were neglected in the bank's summaries, and they do not establish suspicion of involvement in terrorism or money laundering, just as previous articles dealing with the subject do not substantiate this.
- To summarize this company: While the bank was able to establish a reasonable suspicion of money laundering (which does not necessarily amount to a real concern) on the basis of an unidentified and uncontrolled use of cash - a concern that was reasonably addressed by prohibiting cash deposits by an unidentified source within the scope of the temporary remedy - it was unable to establish a real suspicion of involvement in terrorist activity. Indeed, the bank pointed to many red flags in its view. However, a thorough examination of them, each separately, shows that none of them, not even in the aggregate of each other, establishes a real suspicion of involvement in terrorist activity or its financing. Thus, the arrest of the association activist who was in possession of a small amount of cash ended without the filing of an indictment and the seized money was returned; An investigation by the Registrar of Non-Profit Organizations, as of now, has concluded with conclusions indicating accounting deficiencies without a recommendation to take action to close the association and in the absence of any findings of money laundering or involvement in terrorism; Receiving donations from foreign organizations and ties to the 48 association were made a few years ago or were proven to be irrelevant to involvement in terrorism; Contacts with elements involved in terrorism (Bikrat, Sabri, Jilad) were limited in time, the elements were not employees of the organization, and no direct connection to the account activity was proven; Incitement publications (Jaber, Attoun) were carried out in the distant past, are not attributed to the association itself or lack sufficient weight to justify the blocking of an active bank account of the association.
- I cannot accept that the overall picture, against the background of the many flags raised in the Bank's approach, points to a real concern and strengthens it against the background of the multitude of evidence. The reason for this, as stated, is that an examination of each piece of evidence separately leads to a conclusion that does not indicate a concrete and current real concern, as opposed to general indications, some of which originate in the distant past, and some of which do not attest to involvement. Against the background of this conclusion, it is necessary to examine the reasonableness and proportionality of the bank's decision to completely block the activity in the account.
Second Company: Is the decision to completely stop activity in the account reasonable and proportionate?
- The association claims that the bank's reasons for blocking its account have evolved and changed over time. Initially, on November 13, 2023, the bank justified its decision with external information and publications about an investigation against the association and the confiscation of funds. After the association clarified that these claims were inaccurate, the bank presented additional reasons that included suspicion of flaws in the financial statements and suspicious ties with the 48 association. Finally, on January 16, 2024, he decided to close the association's bank account. The association argues that the change in the reasoning, together with the change in the intensity of the sanction from restricting the deposit of cash only to completely blocking the account, raises questions about the consistency of the factual and legal basis for the bank's decisions. The association emphasizes that the cash deposits in its account are completely proper and stem from the nature of its activities, such as small donations collected in charitable funds in mosques. She notes that the "anonymity" of the donors is required in these circumstances, since giving charity is a religious commandment and it is not possible to issue an individual receipt for each small donation. The association added that it has been operating in this manner since 1991, without suspicion from the Registrar of Non-Profit Organizations or the bank, and that the increase in donations over the past three years stems from marketing efforts. All donors are Israeli citizens, and the association does not receive or transfer funds outside of Israel.
- On the other hand, the bank claims that its decision to block the plaintiff's account was reasonable and necessary, due to the "red flags" that arose from its activity, by virtue of the existing law, the instructions of the Bank of Israel, the Money Laundering Prohibition Authority, and court rulings. The Bank is legally obligated to prevent money laundering and terrorist financing, especially after the events of October 7, and operates in accordance with the instructions of the Supervisor of Banks (411 and 308) to monitor suspicious activities. The existence of "red flags" requires strict action, and the bank's decision meets the test of administrative reasonableness. The bank rejects claims of disproportionality, noting that on November 13, 2023, it initially announced a partial restriction that prevented cash deposits. Only two months later, on January 16, 2024, and when no satisfactory explanations were provided, did he announce a complete blocking of the account, with an additional 30 days' notice. The bank emphasizes that the damage caused to it and to the public, including exposure to sanctions, financial and image damage, exceeds the damage that will be caused to the plaintiff if she continues her activity.
- As determined in the interim relief, even now I find that the bank's decision to cease activity in the account altogether is unreasonable, disproportionate, and exceeds the scope of the discretion granted to it by law to refrain from providing service. The Bank is indeed entitled, and even obligated, in accordance with the provisions of Proper Banking Conduct 411 and the Guidelines of the Authority for the Prohibition of Money Laundering and Terrorist Financing, to examine the activities of customers at least once a year and under any change in circumstances. This is especially true against the backdrop of the increase in the use of cash and the state of war that has prevailed in Israel since the beginning of the war, which has led to increased enforcement and the growing concern about terrorist financing by non-profit organizations. However, the cessation of activity in an active bank account, and in particular an account that has been managed for a long period of more than twenty years without complaints on the part of the bank, requires weighty reasons, which exceed those required to refuse to open an account in the first place. Such reasons - based on a concrete and real concern of involvement in terrorist financing or money laundering - do not exist in our case.
- Moreover, the dimension of time is also important. More than two years have passed since the temporary relief was granted. During this considerable period, the bank acted as required by the order, under the bank's magnifying glass. The association continued its banking activity within the limits set - that is, without depositing cash, but through bank transfers and identified payments, without suspicion that during those two years the association was suspected of activity related to money laundering or terrorist financing. The passage of time without new suspicions reinforces the conclusion that a proportionate solution is possible and satisfactory, and that there is no room for a complete closure of the account.
- Weight must be given to the association's reliance on its long-standing mode of activity, and a decision to cease activity in the account altogether causes more harm than necessary. This statement is especially true when it comes to a veteran association, whose activity may cease if the bank account is closed. In the absence of a reasonable concern of terrorist financing, closing the account exceeds the realm of reasonableness, and more proportionate solutions should be preferred, which will not lead to the elimination of the organization's activity, such as limiting the deposit of cash while allowing the continuation of activity through identified bank transfers. The bank did not point to a single case in which temporary relief was granted preventing the closure of an account, based on a detailed analysis of the evidence, and in the end it was determined in the judgment - based on a similar factual basis - that the account should be closed.
Company Three: Using Cash in the Future
- The association argues that the restriction imposed on it in the temporary relief should be removed and that it should be allowed to return to cash deposits. I am unable to accept this demand. As detailed above, there was a suspicion of involvement in money laundering through deposits of considerable sums of cash, with the source of the money unknown. The association did not propose a concrete outline that would address the concern that arose, the outline was not examined by the bank, and no recent decision was made by the bank. Therefore, a cash deposit may only be possible if a way is found that is consistent with the bank's regulatory requirements and the law to identify the source of the money. In the litigation before me, the association was unable to point to a way that would address the concern, the bank did not consider the association's proposal, and did not make a decision, inter alia, against the background of its position that it was appropriate to stop the activity in the account altogether. Since this position was rejected in this judgment, there is no impediment to the association approaching the bank with a request to return to the use of cash, proposing a mechanism that will meet the regulatory requirements and the requirements of the law (inter alia, against the background of the manner in which other associations receive donations in cash and deposit them), the bank will make a decision, and if this is not acceptable to the association, it can apply for an appropriate legal proceeding. There is no room to do so within the framework of the present proceeding, without an appropriate factual and legal basis.
Additional Arguments
- The bank claims that the association refrained from bringing the members of the management who make the decisions and are responsible for managing the account to testify. In their place, three junior employees of the association were brought to testify whose testimony was found to be irrelevant to most of the "red flags" that were raised due to the lack of connection to the management of the account and the relevant periods. Thus, Daoud testified that he is an "ordinary employee" and is not a member of the board or authorized signatory (p. 17, paras. 26-27), and noted that the CEO and the holders of the signing rights are Safa'ad Freij and Samer (p. 18, paras. 10-14). Ka'adneh, who began working for the association only in 2023, confirmed that he knew nothing about events prior to that date (p. 29, questions 13-16), and he also identified Samer Badawi and Spoad Freij as acting directors (p. 29, questions 26 to p. 30, question 1). Jaber, who began his work in 2021 (p. 49, paras. 26-27), confirmed that he does not manage the association's account and is not authorized to sign; that Safaad Freij and Samer, who are authorized signatories, were not brought to testify (p. 50, paras. 21-26); and that he is not a manager in the association (p. 53, s. 8). From all the testimonies, it emerged that none of the witnesses could testify regarding most of the "red flags" that were raised, and in fact, no substantial counter-version was presented by the association in these contexts.
- I cannot accept the argument. The witnesses brought were relevant to the significant red flag that was raised and established - the collection and deposit of cash. Daoud and Qadneh were the actual employees who were involved in collecting donations from the mosques, and Jaber, as the administrative director, was familiar with the processes and documentation policies involved. Therefore, their testimony was essential to understanding how the association operates in this aspect. It is not clear what the contribution of senior officials who are not directly involved in this activity could have been. In any event, if the bank believed that the testimony of the authorized signatories was important to prove its claims, it was entitled to summon them to testify itself.
- In contrast to the red flag that establishes suspicion of involvement in money laundering, the evidence indicating suspicion of involvement in terrorism is much weaker, and I have not seen how a decision to terminate the bank's account activity can be based on it. I don't see how the organization's directors would have refuted its involvement in terrorism when the suspicion of this in advance was not sufficiently founded. In any event, I do not believe that you have failed to act in accordance with the Association's obligation in the absence of sufficient basis for the decision made by the Bank regarding a reasonable suspicion of the Association's involvement in terrorist activity.
- Jaber testified that if the litigation is successfully concluded, he will consider switching banks (p. 65, paras. 25-29). According to the bank, this declaration indicates that the association does not intend to remain in the bank in any case, and therefore the current lawsuit, the purpose of which is to enable it to continue to manage its account at the bank, is a theoretical proceeding. The bank relied on a previous ruling that rejected similar claims on the grounds that they are theoretical and do not bring real benefit to the plaintiff (such as Civil Case (Tel Aviv District) 1034-11-13 Yosef v. Union Bank of Israel Ltd., para. 24 (July 14, 2016)).
- The claim should be rejected. At the moment, the association's only account is managed at the bank, and if you choose to leave the bank, it will be conditional on the possibility of opening another bank account. The case law granted a banking corporation broader discretion on the question of whether to open an account in advance to prevent its closure while it was being conducted, and this is not a vague concern in our case. Hence, it cannot be concluded that we are dealing with a theoretical proceeding. Far from it.
Conclusion
- From all of the above, the claim is partially accepted. The temporary order will be a permanent order.
The bank will bear the plaintiff's attorney's fees in the sum of ILS 30,000.