Israeli banking directives require a receiving bank to hold procedures deciding whether an arriving transfer is accepted, rejected or suspended, and state that as a rule a transfer lacking information about its parties should not be accepted. The same directive lists three grounds counting as a reasonable refusal of service, and a bank that refuses must still consider reporting the matter to the Competent Authority.
A refused transfer is not the same as a returned one. Israeli banking directives give a receiving bank three named options for a payment arriving from abroad, and only one of them sends the money back. The directive names the third without defining it, but the duties it attaches describe a payment left in place, uncredited, while the bank looks for something it was not given.
Key Takeaways
- A bank receiving a transfer from abroad must hold procedures deciding whether it is accepted, rejected or suspended.
- The directive states that as a rule a transfer lacking information about its parties should not be accepted.
- Three conditions are listed as reasonable grounds for refusing service, and one of them is the customer not supplying details.
- A refusal does not end the matter: the bank must still consider reporting the activity to the Competent Authority.
- The Supervisor of Banks investigates public enquiries of substance, but the findings grant no relief a person did not have already.
Why an arriving transfer is queried at all
Because information that should be travelling with it is missing, or the bank has never verified who the recipient is.
Proper Conduct of Banking Business Directive 411, issued by the Supervisor of Banks and titled "Management of Anti-Money Laundering and Countering Financing of Terrorism Risks", sets this out. Section 46 requires a bank to take reasonable measures to detect electronic transfers of foreign origin, destined to Israel, that lack information about the parties. A separate and wider duty sits beside it: where any transfer originating abroad arrives for more than 5,000 new shekels, the bank must authenticate the recipient's identification details to the extent it has not done so before, whether or not anything is missing from the payment.
There is also a formatting condition that turns payments away before anyone looks at their substance. Section 48(b) states that a bank shall not accept an electronic transfer from abroad unless it includes the IBAN details of the transferee's account, except in circumstances the bank has specified in its own procedures.
Accepted, rejected, or suspended
Three outcomes, named in the directive, and the third surprises people. The three names are the directive's own. What each one does to the money is not spelled out there, and the descriptions below are drawn from what the rest of section 47 requires of a bank in each case.
Section 47 requires a bank receiving a transfer from abroad to have risk-based procedures determining whether it should be accepted, rejected or suspended, "because as a rule a transfer lacking information about its parties should not be accepted". That duty falls on the bank holding the recipient's account and on any intermediating bank the payment passed through, which is why a payment can stop somewhere the recipient has no relationship at all.
The directive says what those procedures must weigh: the type of information missing, the country the transfer came from, the sum, the recipient's identity, and the essence of the payment. It also requires them to cover the case where the bank asks the originating or intermediary bank for what is missing.
| Outcome | What it means for the payment | What resolves it |
|---|---|---|
| Accepted | Credited to the recipient's account | Nothing further |
| Rejected | Not credited, and returned back along the chain | The sender starts again with complete information |
| Suspended | Named but not defined in the directive; on the duties attached to it, held rather than credited or returned | The originating or intermediary bank supplies the missing details |
Suspension is where "my money has disappeared" comes from. Section 47 requires the procedures to cover asking the originating or intermediary bank for what is missing, which only makes sense of a payment being held rather than sent back. So it has not moved on and it has not come back, and the party who can end it is usually the bank at the sending end. That is also why a transfer in this state is not the ordinary case in which money is returned to the sender.
Who the Competent Authority is, and what ends a suspension
Two questions the directive answers only in part, and the gap in the second one is itself worth knowing.
The Competent Authority is the Israel Money Laundering and Terror Financing Prohibition Authority, the state body that receives reports of unusual activity under the anti-money laundering order. Directive 411 is not that body and does not stand in for it. The Supervisor of Banks sets out the hierarchy in its own published supervisory policy: the directive is a risk-management instrument issued under the Banking Ordinance, sitting beneath the Prohibition on Money Laundering Law and the order made under it, and the Supervisor coordinates with that authority rather than replacing it. So a bank facing a queried payment is answering to two different regimes at once, and only one of them is the banking regulator the customer can complain to.
What ends a suspension is the harder question, because the directive does not say. It requires the procedures to cover the case where the bank asks the originating or intermediary bank for the information that is missing, and it requires them to weigh the type of information missing, the country of origin, the sum, the recipient's identity and the essence of the payment. It sets no deadline, names no maximum period, and gives the recipient no step to take. The absence is the finding: a suspended payment is resolved by two banks exchanging information, and the person waiting for the money is not a party to that exchange.
That is also where a sender in Australia has whatever leverage exists. The duty under section 47 falls on the intermediating bank as well as the beneficiary's bank, and the party who can supply missing originator details is the institution that sent the payment. It is the sending end, not the receiving end, that is placed to end it.
What counts as a reasonable refusal
The directive lists three conditions and ties them to a statute.
Section 50 states that any one of the following is reasonable grounds for refusing to open and manage an account, including carrying out particular transactions in it, for the purposes of the Banking (Service to Customer) Law, 5741-1981: the customer failing to share details needed to satisfy the anti-money laundering order, the directive and the bank's procedures; reasonable grounds for concern that a transaction is associated with money laundering or terrorism financing; and a case where the know-your-customer process would itself breach a prohibition in the order.
That statute is why the word "reasonable" is doing work. Section 2(a) of the Banking (Service to Customer) Law lists the services a banking corporation shall not unreasonably refuse, and the first is the acceptance of money deposits in Israeli or foreign currency. Attaching unreasonable conditions to a service is treated as refusing it. Section 2(d) supplies the escape: a bank may inform the Supervisor of Banks of a business policy it has adopted, and if the Supervisor does not say he opposes it, a refusal arising out of that policy is regarded as reasonable.
So the question is never whether a bank may refuse. It is whether the refusal falls inside a policy the Supervisor has not objected to.
Why nobody explains it
Because refusing is not the end of the bank's obligations, and the rest point away from the customer.
Section 50 of Directive 411 states plainly that not performing a transaction, or even terminating relations with the customer, does not absolve the bank of its duty to consider whether the activity should be reported to the Competent Authority. And one ground for refusal is that completing the identification process would itself breach a prohibition in the order. A bank in that position is not being unhelpful; the explanation is the thing it may not give.
The measures available are broader than one blocked payment, and section 10(j) requires each bank's policy to name them: restricting activity on an account, prohibiting a specific transaction, and closing the account.
What the person waiting for the money can do
There is a complaint route to the regulator, and two things about it matter to a sender in Australia. It belongs to the person in Israel, not to them: section 16 is about a member of the public and their business with a banking corporation, and the account holder is the customer here. And it is worth knowing what it produces before it is used.
Section 16 of the Banking (Service to Customer) Law requires the Supervisor of Banks to investigate enquiries by members of the public about their business with banking corporations, as far as they appear to him to be of some substance. Where a complaint is justified, the Supervisor notifies the complainant and the bank, setting out the findings and how the defects discovered shall be rectified.
The same section is careful about the limits, and one of them has a clock in it. The Supervisor's findings grant the complainant no right or relief in a court that they did not have before, and do not stop them pursuing any other right - but where another enactment prescribes a time for exercising that right, submitting a complaint to the Supervisor and having it investigated does not extend it. Separately, section 15 treats damage caused by an offence under the law as damage for which compensation is claimable under the Civil Wrongs Ordinance, whether direct or indirect and whether or not the offender is prosecuted.
Where to look next
What a payment rail is made of separates the legal, correspondent, messaging and settlement layers a payment depends on, which is the frame for locating a suspended transfer. How international transfers work covers the ordinary sequence and the parties in the chain. For the live figures, see the Australian dollar to Israeli new shekel page.
Sources
- Bank of Israel, Proper Conduct of Banking Business Directive 411, Management of Anti-Money Laundering and Countering Financing of Terrorism Risks, December 2024 - the detection duty at section 46, the accepted, rejected or suspended procedures at section 47, the account-number condition at 48(b), the reasonable-refusal grounds and surviving reporting duty at section 50, and the account measures at section 10(j)
- Bank of Israel, Banking (Service to Customer) Law, 5741-1981, unofficial English translation - the duty at 2(a) not to unreasonably refuse money deposits in Israeli or foreign currency, unreasonable conditions at 2(b), the approved-policy presumption at 2(d), compensation at 15, and public enquiries at 16
- Bank of Israel, Supervisory Policy on Anti-Money Laundering and Countering the Financing of Terrorism, July 2022 - the statutory framework for the banking system and where Directive 411 sits within it
General information about sending money to Israel and the rules that apply to it. Not financial advice, and not a recommendation of any product or institution. Reviewed by the Tradergy editorial team, September 2026.
Common questions
Can an Israeli bank refuse an incoming transfer?
Yes, and the directive says when. Section 50 of Proper Conduct of Banking Business Directive 411 names three reasonable grounds for refusing service: the customer not sharing details needed to satisfy the anti-money laundering order, reasonable grounds for concern that a transaction is associated with money laundering or terrorism financing, and a case where the know-your-customer process would itself breach the order.
What are the three things that can happen to an arriving transfer?
Section 47 of the directive requires a bank receiving a transfer from abroad to hold risk-based procedures determining whether it is accepted, rejected or suspended. Suspended is the unexpected one. The directive names it without defining it, but the same section requires the procedures to cover asking the originating or intermediary bank for the missing information, which describes a payment held rather than one sent back.
Why will the bank not say why?
Because the rules that trigger the query also restrict what may be said. Directive 411 states that not performing a transaction, or even ending the relationship, does not remove the bank's duty to consider reporting unusual activity to the Competent Authority.
Does a bank have to accept a deposit at all?
It may not unreasonably refuse. Section 2(a) of the Banking (Service to Customer) Law, 5741-1981 lists money deposits in Israeli or foreign currency among the services a banking corporation shall not unreasonably refuse. Section 2(d) lets a bank notify the Supervisor of Banks of a business policy, and if the Supervisor does not object, a refusal arising from it is regarded as reasonable.
What can the intended recipient do?
Section 16 of the same law requires the Supervisor of Banks to investigate public enquiries about business with banking corporations where they appear to be of substance, and to set out how any defects found shall be rectified. The same section states that the Supervisor's findings grant no right or relief in a court that the complainant did not already have, and that submitting a complaint does not extend any time limit prescribed by another enactment.