Biden announced that he would impose sanctions on Russia: "the beginning of an invasion of Ukraine"/Photo: Reuters
President Biden stated in a decree, in accordance with the American IEEPA (International Emergency Economic Powers Act), that from now on the American State Department will be able to impose personal sanctions on people whose actions harm the peace, security, and stability of Israel, the West Bank, Gaza, and the Middle East as a whole.
The order states that people declared by the US State Department will not be able to enter the US, and that all their assets that are in the hands of an American entity, or an entity that has agents in the US, will be frozen and they will not be able to perform any action on them.
Following this, the US State Department announced the inclusion of Four Israelis on OFAC's (office of Foreign Assets Control) sanctions list.
Is this the first time the US has imposed sanctions on Israelis?
This is not the first time.
There are quite a few Israelis who are on OFAC's sanctions lists, also following the Russia-Ukraine war.
It is surprising that precisely in relation to those Israelis, we did not hear such harsh criticism from the Minister of Finance and the political system.
McDonald's branch in Russia.
The network left the country in 2022 following the sanctions imposed on Russia/GettyImages, Contributor
Why do sanctions on private customers scare banks so much that they rush to freeze their accounts?
Legally, the IEEPA states that any financial entity operating in the US, even if it is a foreign entity, must comply with the provisions of the US sanctions otherwise that entity may be exposed to sanctions itself.
These sanctions can also include fines in the hundreds of thousands of dollars (and more), restrictions on The bank's activity abroad - and as a result restrictions on the activity of all the banks' clients abroad, criminal proceedings in the USA against the bank.
In addition, there is a wide variety of risks that the Israeli banks have to take into account, following the Israeli legislation, as part of their risk management procedure.
For example, the impact of a determination that an Israeli bank does not comply with the American regime in terms of the bank's reputation (what person in the western world would want to do business with a bank that the USA has announced it cannot operate in its territories?).
These effects will not stop only at the bank. They can also lead to problems for customers of that bank to carry out transactions, transfer funds, and in extreme cases even use credit abroad.
What is the legal basis for issuing the presidential decree?
We have heard in the political, and non-political, system in the last few days a lot of indignation about how "how can it be that Israeli banks are closed in spite of a foreign government", and that "there is no legal or legal basis for such a restriction".
The use of loaded words, such as foreign rule or no legal basis, is intended to divert the discussion to a populist discussion, without looking at the responsibility of the state and the government that led us in the first place to the situation where the order was issued.
There is no doubt that from a purely legal point of view, the US has the authority to issue the order by virtue of American legislation, and there is no doubt that if the Israeli banks do not comply with the sanctions, the banks themselves will be exposed to sanctions, following the same American legislation.
The result of imposing sanctions on Israeli banks is that the Israeli economy, And all of us, we will receive another blow, from which it is not certain that we will be able to recover.
Beyond that, in terms of Israeli and international regulation, the banks must create a risk management policy for themselves. The potential damages of ignoring the US and OFAC decisions cannot be ignored, and Russia is a clear example of this.
More in Walla!
The leading health fund presents: the services that will make your life easier
in collaboration with Kalit
Adv. Eliran Gomel, head of the banking department at Adv. Yigal Borochovsky & Co.
Who else might be affected by the presidential order?
According to the US order, any foreign person determined by the US Department of State and the US Treasury in accordance with the terms of the US order.
Without going into all the cases, any person determined to be directly or indirectly responsible, or who attempted to carry out actions that would harm peace, stability or security in the West Bank, or who participated in violent or threatening actions against civilians, or the property of civilians, or in the commission of acts of terrorism, encouragement of acts of terrorism , or the intention to carry out terrorist acts in the West Bank.
By the way, it doesn't say Israelis or Jews.
The terminology is any person, and in my understanding this includes Israelis, Arabs, or citizens of any country in the world.
Are there other entities besides banks that need to be careful?
Yes.
Any financial entity that holds assets of those people should examine the effects of the order on its operations.
Is there a chance that the courts will intervene in this case as in the case of Abramovich and Zaka?
The case of Abramovich and Zaka in itself is very unusual, and as far as I know there is an appeal against the court's decision.
It should be noted that these are two different cases from a factual point of view, and with different sanction regimes.
It is difficult to determine unequivocally, but in my opinion the chances are low.
It should be remembered that the Bank of Israel issued a statement today that supports the bank's position, and clearly states the significant risk created for the banks by circumventing sanctions regimes, and the importance of maintaining a normal relationship with the global economy.
The writer is the head of the banking department at the attorney office of Yigal Borochovsky & Co.
More on the same topic:
Settlers
Sanctions
banks
U.S
Russia