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Client updates / Banking & Finance
The Bank of Israel published its latest annual review at the end of May. The review includes an announcement by Supervisor of Banks Yair Avidan that he is promoting the formulation of updated comprehensive regulations on environmental risk management, considering the considerable importance he attributes to the subject of the environment.
Although Israel is a world leader in the fintech field, companies operating in this area face many regulatory challenges. A newly published legal memorandum aims to enable the creation of a “sandbox”, with inspiration from various programs already implemented in Japan, Australia, and Singapore. The goal is to establish a unique experimental environment, a “regulatory sandbox,” where regulatory relief is granted to companies who choose to participate in the program.
As part of a broad change led by the Ministry of Finance to increase competition in the banking and financial services market, a memorandum for the Provision of Financial Information Services Law was recently published for public comments.
The Bank of Israel recently led several important developments in the Israeli payments market, which are designed to encourage competition and to advance the implementation of innovative technologies.
Bank of Israel published a position paper with respect to the activity of banks' payment apps in the B2C market. The position paper is the conclusion of a long battle waged by credit card companies against the banks.
The Tel Aviv District Court issued a ruling recently on a case concerning a bank’s conduct with funds whose source is digital currencies. The court expressly ruled that the bank’s blanket ban on the opening of bank accounts by clients engaging in digital currency activity is unreasonable.
Chapter 8 of the new Insolvency and Economic Rehabilitation Law addresses the liability of officers and functionaries. The law’s main innovation is that - beyond liabilities toward the corporation, which already existed prior to the enactment of the law, such as fiduciary duty and duty of care - special liability will also be imposed on the corporation’s officers and functionaries.
According to a ruling handed down recently by the Israeli Supreme Court, when a real estate asset is sold before the seller enters bankruptcy proceedings, and the seller has not paid the betterment tax, the local council is not obligated to grant the buyer approval for registering the property under his name. Thus, the buyer will be required to pay the betterment tax.
Recently, the Knesset has passed the Law of Insolvency and Economic Rehabilitation – which is aimed at updating the law on insolvency currently in effect in Israel. The Law will take effect in 18 months from now.
Precedent set by the Tel-Aviv District Court rules that a bank may refuse to provide service to a company engaging in virtual currencies.