'It drives you crazy': Immigrants challenge Israeli banks over fallout from Russian sanctions

Tel Aviv [Israel], May 21 (ANI/TPS): An international ban on Russian banking is having a spillover effect in Israel, where thousands of immigrants from Russia, Ukraine, and Belarus are unable to access financial services. Frustrated by what they say is a lack of response from Israeli banking officials, the immigrants have filed a petition with Israel's High Court of Justice.
"Immigrants from these countries face significant difficulties transferring legitimate savings and salaries to Israel, with half reporting obstacles despite having proper documentation," Sofia Tupolev, head of the Economic Integration Association, which petitioned the High Court, told The Press Service of Israel.
The petitioners are seeking regulatory reforms after documenting widespread issues, primarily opening accounts and overseas money transfers.
Following Russia's invasion of Ukraine in February 2022, Western countries imposed unprecedented sanctions on Russia's financial system. Major Russian banks were cut off from the SWIFT network. The SWIFT network -- short for Society for Worldwide Interbank Financial Telecommunication -- is a global messaging system used by banks and financial institutions to exchange information about financial transactions.
Banking systems in Iran, North Korea, Belarus, Syria, and Venezuela are also banned or restricted by the network.
In 2022-2024, approximately 80,000-100,000 new immigrants arrived in Israel from Russia and Ukraine, according to government figures. In a survey conducted by the association, half of the more than 1,000 respondents said they had been denied banking services. Of these, 70 per cent said their issues remained unresolved or only partially addressed.
The petition specifically targets the Bank of Israel, as the supervisor of the banking system, requesting the court to mandate the establishment of "clear, substantive, and uniform policies" regarding the application of international sanctions by Israeli banks.
The challenges faced by new immigrants are attributed not only to these sanctions but also to what the petition describes as Israeli banks' inability "to strike a reasonable balance between compliance requirements and the fundamental rights of new Israeli citizens."
A Bank of Israel spokesperson told TPS-IL that the institution could not comment on a matter that was pending before the High Court. The court postponed a hearing initially scheduled for Thursday.
"The problem lies with the zero-risk attitude of Israeli banks," MK Oded Forer told TPS-IL. The former chair of the Knesset Committee for Immigration, Absorption, and Diaspora Affairs, Forer, organized a panel discussion on the issue in 2023.
"The banks hear the word 'Russia' and refuse to engage with the individual. Many new immigrants are denied the ability to open a bank account, while even more face difficulties transferring money to Israel," Forer said. "Such attitudes harm both the immigrants and the state because these individuals leave Israel for other destinations where they are welcomed and take their money with them."
Elina Mangasaryan, an international legal tech expert who immigrated to Israel from Russia in 2022, shared her frustrations.
"As someone familiar with international banking systems, I felt like a 'shoemaker without shoes,'" Mangasaryan recalled to TPS-IL. "I encountered issues at every step--either they were completely unresolvable or required an unreasonable amount of time and effort to address. When my son started his studies in the U.S., I wanted to send him monthly support, but my bank told me I couldn't transfer money abroad because the funds originated from Russia."
She tried different banks, to no avail.
"Every bank cited different reasons," she told TPS-IL. "It drives you crazy that there are no clear rules, and every clerk seems to make their own decisions."
Said Forer, "You cannot leave people in the dark. The Bank of Israel should issue clear instructions to banks regarding compliance procedures for immigrants from countries subject to international sanctions. Banks must properly manage their risks and evaluate each case individually."
According to Mangasaryan, a ruling for the immigrants would also push the Israeli banking system towards what she said was much-needed modernization.
"Israel is losing not just money but also creative professionals," Tupolev said. "It's in the best interest of Israeli banks to address this issue professionally." (ANI/TPS)