An Israeli court has rejected a request by the owner of a check-cashing business to force Bank Hapoalim to accept about 3.4 million shekels ($1.1 million) that had been returned to him by police after a criminal investigation was closed without charges.
Nazareth-Nof HaGalil Magistrate’s Court Judge Ofer Haim Shorak ruled that the closure of the case and return of the money did not automatically require the bank to accept the funds. He found that the bank was entitled, and required, to exercise independent judgment under anti-money-laundering regulations.
(Photo: Aviv Gotliv)
The dispute began after police searched the businessman’s home in September 2023 and seized about 2.98 million shekels in cash, along with roughly 21,000 euros and $4,900. The money was subsequently deposited in the forfeiture fund administered by the Administrator General.
The investigation was later closed by prosecutors without an indictment. In May, police transferred about 3.4 million shekels to the man’s private Bank Hapoalim account, but the bank refused to accept the funds and ordered that they be returned to police, saying it had not received satisfactory documentation explaining the source of the cash.
After meetings and correspondence with the customer, the bank agreed, as an exception, to accept 1.05 million shekels. That amount matched documented cash withdrawals the man had made from his business account in the days before the money was seized.
The businessman refused to split the sum and asked the court for an interim order requiring the bank to accept the entire amount.
He argued that the money came from lawful withdrawals made for business purposes and said the cash had been kept at his home in the bank’s original envelope. He also maintained that police and prosecutors had examined the source of the funds and ultimately closed the investigation, arguing that the bank should not place itself above law-enforcement authorities.
Bank Hapoalim countered that there was no convincing business or economic explanation for keeping such a large amount of cash at home for weeks. It also pointed to activity in the business account in the months before the seizure: checks totaling about 21.2 million shekels had been deposited, while cash withdrawals amounted to about 21.1 million shekels.
The bank further argued that the businessman had failed to provide records from the check-cashing business’s computerized system that could establish a clear link between the seized cash and the company’s books.
Judge Shorak accepted the bank’s position, finding that it had presented a solid evidentiary basis showing that its refusal to accept the full amount was reasonable. The lack of documentation and the storage of millions of shekels in cash at a private residence constituted clear “red flags,” he ruled.
The court stressed that banks perform a quasi-regulatory role on the front line of efforts to combat money laundering and are not bound by the decisions of police or prosecutors. The fact that a criminal investigation ends without charges does not, by itself, establish the source of funds to the standard required of a financial institution.
The ruling also noted that forcing a bank to accept funds whose origin remains disputed could expose it to financial penalties and international sanctions, while undermining the broader public interest in preventing money laundering.
That public interest, the judge found, outweighed the customer’s private interest in having the full amount deposited.
The court also rejected the businessman’s proposal to place NIS 2 million in a locked deposit until a final ruling in the matter, reasoning that simply receiving the money would itself constitute a banking transaction subject to monitoring requirements.
The request was therefore denied, and the businessman was ordered to pay Bank Hapoalim NIS 5,000 in legal costs and attorney fees.