Leumi Bank closed the bank account of an association, contending that it was supporting terrorist organizations in the Palestinian territories and the Gaza Strip. The association contended that there is no justification for such action because it stopped transferring the funds after October 7, 2023.
The Court held that the bank has the right to refuse to provide services to the association. Israeli law stipulates that a bank may not refuse to provide a service, except for reasonable reasons, in light of the fact that the bank provides unique services that are irreplaceable. However, banks also have obligations such as refusing to provide services to clients whose activity raises "red flags", such as an activity related to money laundering or terrorist financing, even if it is a past activity. Here, the association's activities included the transfer of huge sums to the Palestinian Authority and the Gaza Strip, when the association's representatives were seen with elements associated with the Hamas. Therefore, the fact that the transfer of funds was stopped after the events of October 7 does not cure the problems in the association's activities and the bank had a reasonable reason to close its account.