Legal Updates

A bank may refuse to grant services if there is suspicion of breach of international sanctions

April 2, 2024

An Israeli citizen whose name was included in the European Union's sanctions list, which demands the freezing of his assets, requested to donate a considerable sum to Zaka (Israeli non-profit of voluntary community emergency response teams).

The Supreme Court rejected the motion to force the bank to accept the funds and held that the bank acted within its authority in refusing to receive the donation. A banking corporation is prohibited from refusing an unreasonable and blanket refusal to provide certain banking services that are considered essential to the public. However, as long as the refusal is not a blanket refusal, or when the refusal stems from a business policy that was submitted to the Banks Supervisor and was not met with opposition, then it cannot be considered an unreasonable refusal. Here, the bank's refusal stemmed from an official risk management policy that was created pursuant to the requirement of the Supervisor of Banks, and was made only after the bank made a detailed inquiry regarding the applicability of the sanctions and their exceptions. Thus, the refusal was not a blanket, arbitrary refusal, contrary to policy or, therefore, unreasonable, and the bank is not obligated to transfer the donation money.