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A bank may not refuse to open or manage a bank account for a fintech company that operates under the Prohibition on Money Laundering Law

November 17, 2021
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Leumi Bank refuse to continue the management of a bank account of a fintech company, contending that the company activity raises suspicion of money laundering. This is despite the fact that the company operated under a license and under the provisions of the Prohibition on Money Laundering Law.

The Court held that the bank's refusal to provide the company with services is unreasonable. The law stipulates that a bank may not unreasonably refuse to provide services. The rationale underlying the law is intended to balance between the fact that the service provided by the bank is deemed an essential service provided by a limited number of factors, and the fact that the bank also has obligations under the Prohibition on Money Laundering Law, including the obligation to identify and know the client (KYC), as well as to conduct a subjective assessment of the level of risk posed by the client’s activity. Here, the fintech company has a lawful license that is subject to prohibition on money laundering obligations, and it is willing to comply with the bank's requirements and reach an agreement that will allow for proper relations between the parties. The bank could not actually point out any company suspicious activity. Thus, the bank's refusal to provide the company with services is unreasonable and the company in entitled to continue managing its account at Leumi Bank.