The Financial institution of Israel Banking Supervision Division, headed by Daniel Hahiashvili, revealed a draft guideline for the banks immediately on the private sanctions regime that the European Union, and probably different international locations in Europe as effectively, plan to impose on Jews dwelling in Judea and Samaria. The Banking Supervision Division’s draft tips instruct the banks on how you can behave and how you can formulate their coverage when they’re threatened with sanctions by the EU and by international locations hostile to Israel.
Yesterday, Minister of Finance Bezalel Smotrich wrote to Hahiashvili saying that he wouldn’t permit a coverage of “zero threat” by the banks in the event that they search to limit or ban prospects for worry of sanctions.
“A accountable threat administration coverage can’t ignore the excessive worth that compliance with sanctions on law-abiding Israeli residents exacts,” Smotrich wrote to Hahiashvili, including, “It’s inconceivable that the banks ought to select to behave small mindedly and throw their prospects by the wayside with out lifting a finger.”
The Banking Supervision Division’s draft directions, which have been mentioned within the Financial institution of Israel’s correct banking procedures committee two weeks in the past, clarify that lately the usage of varied sorts of financial sanctions as instruments of authorized enforcement has grown. This instrument “represents a lever of strain and deterrence within the worldwide enviornment.”
The draft states that when an Israeli financial institution circumvents overseas sanctions regimes, it’s uncovered to “varied dangers that it has to handle, amongst them compliance dangers, cash laundering and terror financing dangers, authorized dangers, and reputational dangers.” The financial institution’s threat administration coverage impacts its relationship with a buyer on whom sanctions have been imposed.
The Banking Supervision Division seeks to make sure that, alongside efficient threat administration, a financial institution will nonetheless give acceptable banking service to prospects affected by the imposition of sanctions. The division says that it has been working for about two years “to make sure that along with appropriate threat administration in relation to the sanctions regime, threat administration won’t be carried out via a sweeping refusal upfront to offer companies to prospects in accordance with the obligations that fall on the banking system.”
The draft guideline calls on the banks to formulate related insurance policies and procedures. They need to assess the danger of breaching the sanctions or misuse of a banking company to bypass sanctions. Whereas the banks mustn’t cope with the danger posed by sanctions by a blanket refusal to offer service to affected prospects, the directions allow “an inexpensive refusal to offer service to a buyer.” The Banking Supervision Division thus permits the banks discretion in avoiding offering service to an individual on whom sanctions have been imposed.
Revealed by Globes, Israel enterprise information – en.globes.co.il – on June 5, 2025.
© Copyright of Globes Writer Itonut (1983) Ltd., 2025.
