Foreward by Andrew Chilvers
For companies and individuals looking to move into new jurisdictions for business opportunities, setting up a bank account is a crucial part of the process. But this is never as straightforward as it seems.
In all countries, banks are obliged to crack down on fraud and any potential financial scullduggery. As a result, they tend to be very risk averse. Regardless of where a business establishes an office in the world, local banks will generally have the newly arrived expatriates jumping through various hoops, pulling their hair out in frustration.
The new arrival will need the relevant paperwork, including personal identity papers, a personal and business address, personal references and other numerous documents. And that’s just the beginning.
Every jurisdiction has its own banks and banking rules, which are often complex and bureaucratic. Consequently, seeking advice from local legal and financial experts before setting up a bank account is imperative if a company is it get the right account for its particular business objectives. This is why it’s so important to use local advisers who are experts in the jurisdiction to provide information about the local banking rules.
What is the general risk appetite of banks in your jurisdiction and how does that affect setting up a new business bank account?
The banking system in Israel is highly sophisticated and offers a wide range of advanced features. All the major banks in Israel are proficient in all international financial operations; and provide various financial services to different types of companies with comprehensive, efficient and high quality financing solutions for every business purpose. Israeli banks are represented worldwide, most having branches in several important financial centres.
All banks operate under the supervision of the national Central Bank, which also manages the country’s national currency and include banking options of commercial services, investments and cooperative credit institutions.
It is becoming more difficult to open commercial bank accounts in Israel, particularly for companies owned by foreign nationals due to the changes in the anti-money laundering laws, FATCA requirements and BEPS regulations.
All main banks specialise in a range of industries but focus mainly on technology companies, high-tech, start-ups, RND and bio-medicine, retail and real estate.
In order to open an account it is required to prove some connection to Israel and therefore it is recommended and significantly easier to register an Israeli company.
Registering an Israeli company can offer significant tax benefits and, in some circumstances, even reach a tax rate of 12% and even less.
How accommodating are banks in your jurisdiction for opening a business and personal bank account?
There are 12 banks in Israel, among them the top five accommodate international business accounts and private accounts for foreign nationals.
The vetting procedure is similar in all major banks in Israel:
• All banks require a reasonable connection to Israel;
• The KYC procedure requires the following documentation:
a. Company documents translated to English and certified by notary and apostille;
b. Company extract from the last 3 months, certified by notary and apostille;
c. KYC documents for all individuals involved in the company (directors, shareholders and beneficial owners) including passport copy, additional ID and proof of address, all certified by notary and apostille;
All banks need to perform a video validation with the company’s director and authorised signatory;
• Company resolution to open a bank account at a specific bank;
• Attorney’s approval for expected actions in the account; and
• Financial statements of the company, if any.
The process for opening a bank account for international companies is long and difficult due to a new regulation that was introduced to the banking system in the past few years. However, according to local legislation it is mandatory for all Israeli banks to open business accounts for Israeli entities and therefore it is much easier and faster to register a local company and open a bank account for the Israeli entity.
All 12 banks in Israel accommodate private accounts for foreign citizens and offer “non-resident accounts” for individuals who live abroad, but can prove a connection to Israel. The eligibility for opening the account will depend on whether the individual meets the criteria the banks set including the number of days spent in Israel per year.
The vetting procedure is similar in all banks:
• The KYC procedure requires the following documentation:
a. Valid passport copy
b. Additional Identification certificate such as a driving license
c. A proven connection to Israel;
In case the individual is a foreign resident, it is required to arrive to a meeting at the bank in order to open the account. In case the individual lives abroad, it is required to perform a video call with a bank representative.
The process for opening a private bank account for a foreigner usually takes 2-4 weeks, depending on the bank’s internal compliance procedure.
Should you join an internationally reputable or established bank rather than a local bank?
The banking system in Israel is very stable and highly sophisticated which offers a wide range of advanced features such as full and easily operated online services in various languages, which makes it very attractive to foreign companies and individuals.
In the global perspective, the international banking system is creating difficulties in the process of opening bank accounts for foreign companies, the vetting procedures are becoming more complicated and banks are not eager to open new accounts.
Israel is no different. As previously mentioned, it is difficult to open a bank account for a foreign company in Israel and therefore it is preferable to register an Israeli company and open a local bank account. The process might take several weeks up to two months, but the banks are required by local legislation to open a business account for all Israeli companies.