MK Rabbi Eichler: Banks Must Not Surrender to ‘Gemach Decree’

At a Public Petitions Committee meeting Monday, attended by the Governor of the Central Bank of Israel, Karnit Flug, MK Rabbi Yisrael Eichler, head of the committee, spoke of the “Gemachim Decree,” where banks are being forced under pressure from foreign governments to close gemach accounts.

Banks are telling chairpersons of gemachim that they need to legally secure their non-profit status, or they will find themselves without bank accounts. The First International Bank is the latest to issue letters to the heads of the gemachim demanding that they produce paperwork that they are recognized as non-profits. Failing to do so will result in the closure of the gemach bank accounts, the bank said.

Like banks around the world, Israeli financial institutions are lining up to comply with rules set by the IRS, the Justice Department and other U.S. agencies. American laws against money laundering are now the de facto standard worldwide, with the U.S. demanding that all institutions that do business with American banks reveal full details about accounts held by American citizens, or accounts that receive money from the U.S.

Failure of an institution to furnish full information demanded, could result in a 35 percent penalty on all transactions with U.S. institutions, and continued refusal could get an institution blacklisted as supporting money laundering.

“I expect the Bank of Israel find a way to abide the agreements with the U.S. and on the other hand, not to spill the charitable funds of the gemachs into the bath of the war on terror. The banks must not become a burden and a restriction on associations and charity organizations who want to help people and do not engage in terrorism. There are limits to the madness of the banking system. We must not allow the charity organizations and gemachs to be paralyzed by the American pressure,” said MK Rabbi Eichler.