The Israeli banking system keeps mounting challenges for bitcoin users, be they exchanges, miners or just traders, and keeps getting slapped for it by the courts. The latest example comes from Tel Aviv where a bank tried to deny incoming transfers from an exchange.
Bank Uses AML as Excuse to Block Bitcoin
Bank Hapoalim (TASE: POLI), Israel’s largest bank, has been forced by the Tel Aviv District Court to accept a transfer of funds resulting from the sale of bitcoin. A client of the bank was denied an incoming transfer of $195,000 from a European bitcoin trading venue into his joint account.
Hapoalim claimed that there was a reasonable basis for concern that the sale of bitcoin was linked to money laundering and financing of terror, this despite the existence of documents indicating the exact source of the funds used for the purchase in this case and enabling ability to track the money from beginning to end. In addition, the transaction was duly reported by the client to the Israel Tax Authority. None of this was sufficient to convince the bank, which insisted on its refusal, and even informed the client that it intended to return the funds within a week.
This Sunday the two sides faced each other in court and the bank folded. In a hearing before judge Limor Bibi regarding a request for temporary injunction, it became clear that there is no real suspicion of violations of AML laws or of taxation offenses, and the bank was forced to agree that the funds would be deposited in the client’s account immediately. For his part, the trader agreed to sign an IRS W8 form proclaiming he has no linkage to the US. This indicates, that like in previous cases, the Israeli bank’s real concern is an eventual crackdown by American regulators. Interestingly the court also rejected the bank’s request for a gag order regarding the case.
Extreme Escalation
Doron, Tikotzky, Kantor, Gutman & Amit Gross, the law firm which represented the plaintiffs, commented: “Recently, we have witnessed an extreme escalation in the banks’ fight against Bitcoin and the other virtual currencies. In what appears to be a planned policy of targeted assassination, the banks are preventing their customers from returning foreign money originating in virtual currencies to their Israeli accounts, even though the clients wish to declare the movement of the funds and pay their taxes according to the law.”
“This is an important precedent that obliges the banking system as a whole to reconsider its policy regarding funds originating in virtual currency transactions, while conducting a real and relevant examination of each ad hoc transaction, rather than automatically denying each transaction without examining it on its merits,” they added about the outcome of the case.
https://news.bitcoin.com/tel-aviv-court-forces-bank-to-accept-funds-from-sale-of-bitcoin/
