Many international companies with extensive operations operate several offices around the world and several bank accounts, both for reasons of redundancy and so that there is always a bank in proximity to the company’s customers and local office. Although banks are interested in their customer’s success, they are subject to, among other things, strict international rules and regulations which prohibit money laundering and terrorist financing, and any deviation from these will almost certainly result in significant fines and sanctions. As such, banks in general and banks in Israel in particular tend to be overly conservative. Transfer of funds whose origin is unknown, or whose origin is in an activity that the bank representative doesn’t understand, will be met with resistance and the funds will not be able to reach the bank account of the company or entrepreneur in Israel. This is also the case with funds originating from proper companies, whose receipt is accompanied by invoices and full documentation of the transaction in the banking system, with no doubts regarding their source: there is no guarantee that they will be accepted at your bank. Even receiving funds in which there is a layer of crypto will likely be blocked, despite the Bank of Israel’s order that there should not be a blanket ban on receiving funds from this source. The number of refusals of this type is greater than the banks are willing to admit.
When you open a bank account in Israel, the bank will glorify their branch and tell you how much it “specializes in hi-tech” and works with companies similar to yours. But you will very quickly find yourself busy fulfilling the bank’s many compliance requirements instead of managing and promoting your company, simply because the bank does not truly understand your line of work. In the meantime, your company will not receive payments from clients for work you have already completed, and you will incur damage even though you are acting lawfully. This happens in banks in Israel every day and on a huge scale.
But not all is bleak, and there are solutions. At Tal Ron, Drihem & Co., we have been working with the banking system for two decades and know the system inside and out. We know exactly who to talk to about your company and at which bank, as well as to ensure that that bank fully understands your activities and will not block the receipt of legally transferred funds, thereby causing damages.