A bank refused to open an account for an heir seeking to transfer to Israel inheritance funds from a Panamanian company’s account in Singapore. This refusal was issued as no documentation was provided to verify the source of the funds or the connection between the deceased and the foreign company that owned the account. Furthermore, the refusal was based on the heir's criminal record, which included convictions for serious tax offenses.
The Court held that the bank's decision was reasonable and necessary in accordance with the Israeli Prohibition of Money Laundering Law. Pursuant to legislation, the "Know Your Customer" obligation requires banks to verify the source of assets and prohibits providing service without completing this process, especially in cross-border activities defined as high-risk. Refusal to open an account is considered "reasonable" if the customer fails to provide required details or refrains from cooperating for the purpose of implementing the banking corporation's risk management policies. In this case, the heir, who has a criminal record for tax offenses, failed to substantiate the source of funds or the connection of the deceased to the Panamanian company, a situation that constitutes a "red flag" justifying the refusal. The failure to provide information regarding the source of the money and the identity of the company's owners, without proof of an attempt to obtain it, justified the bank's refusal to open an account for the heir and thus the bank's refusal to open the account was reasonable.