BoI proposes restrictions for online accounts

The Bank of Israel is concerned about potential online money laundering.

The Bank of Israel is moving forward on the issue of opening online accounts. Last week, the Bank of Israel circulated a draft memorandum on the matter, which included restrictions on opening online accounts. Supervisor of Banks David Zaken imposed restrictions on this type of account in order to combat the money-laundering that might occur when accounts are opened online without face-to-face identification of the account holder.

The directive say that opening an online account will only be possible for people who already hold a bank account, and one of the preconditions for activating the account is transferring funds from another bank account that is in the customer’s name. In other words, it is not for new customers, who do not already hold a bank account. Likewise, opening an account will be possible only for customers 18 and over.

Opening online accounts is intended to enhance competition in the banking sector, and the proposal to move forward on the matter was in the Zaken Committee report that was issued 18 months ago. According to banking community sources, today, most young people opening their first bank account do so at their parents’ bank, which helps to preserve the banks’ market shares. The banks believe that there is a reasonable chance this will continue, as, according to the Bank of Israel’s draft terms, it will not be possible to open a first bank account online.

The Bank of Israel set additional restrictions for accounts opened online: it will be possible to conduct cash transactions only up to NIS 10,000, and other activities up to NIS 50,000. Furthermore, the balance on the account is not to exceed NIS 300,000, and signatories may not be authorized on the account. The various restrictions will be lifted when the customer appears in-person at one of the bank’s branches and completes the identification process.

When opening an online account, a customer will need to send the bank a copy of his or her identification card, and there will also be a video chat with the bank to enable the bank to clearly identify the customer. This type of account will carry a special marker within the bank’s system, in order identify risks. The Bank of Israel has only published a draft at this stage, which is subject to change, but once the final version is published, the directive will go into effect, and any bank that wishes to allow its customers to open an online account will need to inform the Bank of Israel of their intentions 60 days in advance.

Published by Globes [online], Israel business news - www.globes-online.com - on April 2, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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