Israeli bank: account opening guide
Introduction
Israel boasts a highly developed banking system that excels in international financial transactions and offers a diverse array of financial services tailored to a wide range of business entities. However, it's crucial to understand that foreign companies aiming to engage in business activities in Israel must navigate the intricate process of establishing a corporate account before officially registering as a foreign company or branch within the country.
The Israeli banking landscape places a strong emphasis on adherence to rigorous regulatory standards, and these standards have undergone recent enhancements. For instance, since 2016, Israel has enacted a new law governing financial services, which prioritizes safeguarding the rights of financial organization clients and ensuring compliance with antitrust regulations. Furthermore, Israel has increased oversight of foreign companies providing trading services for securities listed on exchanges and trading systems, a realm known as brokerage in Israel. Simultaneously, efforts have been made to foster the growth of digital banking.
The procedure for initiating a corporate bank account in Israel
The process of opening a corporate bank account in Israel can vary significantly, contingent upon factors such as the size of the company, the sector it operates in, and the specific type of business it represents. It's noteworthy that accounts established in Israeli banks can be multi-currency, providing flexibility for businesses with international dealings.
Required documentation for account opening
To initiate an account with an Israeli bank, a set of essential documents must be provided, including:
- The company's board of directors' decision to open an account.
- Constituent documents, encompassing articles of association, the certificate of registration, and other pertinent materials.
- A roster of authorized signatories, accompanied by photocopies of their identity cards or passports.
- Financial statements (if the company is already engaged in financial activities).
- A certificate of good standing for the company or the position it holds.
Opening an Israeli bank account for non-residents
Many Israeli banks extend the option of "non-resident accounts". Eligibility for these accounts hinges on the criteria set forth by each individual bank, and it's important to note that these financial institutions may maintain varying rules and standards. Non-resident accounts offer several benefits, such as exemptions from specific taxes and fees, as well as access to preferential interest rates on deposited funds (though the specifics of preferential terms should be verified with the respective bank).
Types of accounts for non-residents
Israeli banks typically present two primary account options to foreign individuals: checking and savings accounts. Checking accounts cater to activities like bill payments, money transfers, and everyday transactions. Savings accounts may offer either fixed or variable interest rates, with the caveat that accessibility to currency in savings accounts might be restricted. To facilitate international transfers, banks assign an IBAN to each account, ensuring the proper processing of such transactions.
Procedure for foreigners opening an Israeli account
The process for foreign individuals opening a bank account in Israel typically involves the following steps:
- Submission of an application, along with a comprehensive set of necessary documents, for review by the bank.
- Signing an agreement with the bank to establish and maintain the account.
- Depositing funds to activate the account.
- Gaining access to internet banking services.
Many banks may impose a nominal fee for account opening, alongside an initial deposit requirement. Additionally, the financial institution's manager may request documentation validating the legitimacy of the capital deposited into the account, which could include evidence of the funds' origin and statements from other bank accounts. Account maintenance fees on a monthly basis are also common, and eligibility criteria may apply, such as the requisite number of days a foreign account holder must spend within the country to be eligible for a non-resident account.
Selecting a bank in Israel for opening a bank account
The choice of the Israeli bank will depend on your specific needs and preferences. It's advisable to contact several banks, discuss your requirements, and compare the services they offer before deciding. Additionally, consulting a financial advisor or legal expert with knowledge of international banking regulations can provide valuable insights.
Here are key factors you should consider
- There are several major banks in Israel, including Bank Hapoalim, Bank Leumi, and Israel Discount Bank, among others. These banks have dedicated services for non-residents.
- Look for banks that offer online banking services in English and foreign currency account. If you plan to deal with multiple currencies, inquire about the ability to hold and transfer different currencies within your account.
- Consider the bank's branch network and their accessibility to you. Proximity to branches can be important if you need to visit the bank in person.
- Compare the fees and charges associated with the accounts. Non-resident accounts may have different fee structures, so ensure you understand the cost involved.
When making your choice, consider the specific services Israeli banks offer for non-residents, the fees associated with the accounts, the accessibility of branches if needed, and the quality of their online banking platform in English. It's essential to contact the banks directly, discuss your needs, and compare the services they provide.
What obstacles may non-residents encounter?
Obstacles that non-residents may encounter when wishing to open a bank account in Israel most often relate to regulatory and compliance requirements.
Let's give examples of some of them.
- Residence status. Israeli banks typically give preference to residents over non-residents. Non-residents may face restrictions on the types of accounts they can open or the services they can access.
- Currency exchange. Non-residents may have to consider currency exchange rates and fees, especially if they want to have accounts in multiple currencies.
- Regulatory Compliance. Non-residents may face additional checks to ensure compliance with AML and KYC requirements.
- Physical presence. Some banks may require non-residents to visit a branch in person to open an account. This can also be difficult due to the country's strict visa policy.
- Tax aspects. Depending on your country's tax laws, opening a foreign bank account may have tax implications. It is recommended that you consult your tax advisor to ensure compliance.
- Transaction complexity. Non-residents may face restrictions or additional steps for certain types of transactions, especially large international transfers.
