Steps intended to ease the process of opening and managing a business account

The draft in Hebrew 


Against the background of the inclusion in 2016 of tax offenses in the framework of the Prohibition on Money Laundering and Terrorism Financing in Israel Law, the Banking Supervision Department published on November 13, 2016, a letter on
“Preparation for Compliance Risk Management in View of the Determination of Tax Offenses as Predicate Offenses”. The letter emphasized several points, as well as red flags that may be more relevant to tax offenses with regard to managing compliance risks at banks.

 

In light of the period that has since passed, and the experience accumulated in the banking system, the Banking Supervision Department formulated several changes in the letter, in collaboration with the Israel Tax Authority and in coordination with the Israel Money Laundering and Terror Financing Prohibition Authority. The goal of the changes is to ease the process of opening and managing a business account. It is currently being published as a draft directive for public comment.

 

The changes in the supervisory letter:

      1. A bank may rely on a customer’s signed declarations in case of business customer, as reference for opening and managing the account, in order to manage compliance risks vis-à-vis the Israel Tax Authority.

The bank is to submit copies of these declarations to the Israel Tax Authority in the manner and time to be set by the Israel Tax Authority.

       2.  It is clarified that some of the red flags in the list that is in the appendix to the letter shall not apply to public companies.

 

The Banking Supervision Department assesses that these amendments, which are expected to enhance the certainty for banks in the management of compliance risks, will assist in reducing the friction with customers and in easing their activity.