Jerusaelm – Report: Israeli Banks Bar U.S. Customers From Holding Securities

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    Jerusalem – Israeli banks will no longer allow US residents to hold securities accounts. Sources inform ”Globes” that the banks recently notified US residents with accounts in Israel that they will no longer be allowed to hold securities in these accounts. The banks instructed the US residents to immediately sell the securities in their possession, or, alternatively, to close the account.

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    The sources added that Bank Hapoalim, Bank Leumi, and Israel Discount Bank were among the banks that sent out such notices. US residents are believed to hold several billion dollars worth of securities in investment accounts in Israel.

    The sources said that several customers had considered hiring an investment house to manage their accounts, but that they were informed that there was no choice: sell all the securities.

    The origin of the new policy is the UBS AG scandal in Switzerland. UBS held billions of dollars in accounts owned by US residents, who held the money there, among other reasons, to evade US taxes. The Internal Revenue Service (IRS) applied uncompromising pressure on UBS to disclose the names of the account holders so that the IRS could find tax evaders.

    In an unprecedented move, UBS agreed, and signed an agreement with the IRS, in which the bank disclosed the names of 300,000 US customers who held money in confidential accounts, and whom the IRS suspected were tax evaders. UBS also agreed to pay the US government $780 million compensation to avoid lawsuits being filed against the bank.

    In the aftermath of the agreement, the IRS began applying similar pressure on banks in other countries, Israel included, where US residents held bank accounts. So far as is known, the IRS sent a message that it would make it more difficult for the foreign banks to operate in the US unless the demands were met.

    The US demands are based on existing regulations, which have gained prominence as the US toughens its enforcement of them.

    Sources close to the affair said that no explicit demand had been received, but that the Israeli banks decided to act on their own.

    Bank Hapoalim said in response, “The bank’s decision was taken on the basis of a legal opinion recently given by US lawyers.”

    Discount Bank said in response, “The matter is under review. We’ll act as required.”


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    16 Comments
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    Loshon Hora
    Loshon Hora
    14 years ago

    This will cause a major sell-off on the Tel Aviv Stock exchange. That isn’t good.

    Anonymous
    Anonymous
    14 years ago

    This basis wasn’t taken based on legal opinion, they have an agenda there not sharing.

    Anonymous
    Anonymous
    14 years ago

    This is a long overdue step and will stop the pervasive level of U.S. tax evasion many have routinely engaged in. Hopefully, the IRS will also be able to identify the thousands of tax cheats who have evaded taxes over the years and impose severe penalties in addition to collecting back taxes. The federal and state governments are broke and it is a chilul hashem that this has been allowed to happen but the game is now over.

    Anonymous
    Anonymous
    14 years ago

    What people don’t realize is that Tax evasion on a small scale [the way it is now] is great for the economy, because alot of people have money and that makes it’s way the markets. As opposed to if everyone would be paying full Taxes, and have less money to send around etc.

    Anonymous
    Anonymous
    14 years ago

    a small correction:
    ubs disclosed in feb2009 300 not 300000 us customers and is supposed to disclose another 4450 till end of 2010.

    Leah
    Leah
    14 years ago

    I don’t understand. Why doesn’t the US government just give them amnesty like they want to give the illegals? Oh wait. It won’t create more voters for them. never mind, go back to robbing people of their wealth so we can give it lazy welfare recipients. (That said, I don’t believe our Kolel families should be taking money from the government. It is wrong. It makes us look back. But then again, if the government didn’t steal so much money from the wealthy, the wealthy would have more to support the kolels with. I understand it is a double edged sword, but that is my 2 cents.)