American Jews Seek Israel Backup Accounts

Since the outbreak of war between Hamas and Israel on October 7th, the number of antisemitic incidents worldwide has soared. In the UK, according to the Jewish community’s security organization, CST, there have been 1124 antisemitic incidents, the highest ever total reported to CST across a 32-day period. In France, the Minister of Interior reported that since October 7th there have been 1040 antisemitic incidents and 486 arrests. In Brazil, according to the CONIB, which tracks antisemitism in the country, there have been 467 antisemitic incidents, a 961% in comparison to the previous year. In the US, the Anti-Defamation League (ADL) reports that the number of antisemitic incidents has more than quadrupled since the start of the war. Between October 7th and November 7th, the ADL Center of Extremism documented 832 incidents of assault, vandalism, and harassment. This compares with 200 incidents during the corresponding period last year. 

In the past, some American Jews had held bank accounts in Israel. The purpose of these accounts was typically to support family members who had made Aliya, to deal with cash-flow and expenses related to real-estate owned in Israel, and in the minority of cases – in order to keep some cash aside for a ‘rainy day’. Having said that, very few of these Jews actually envisaged a scenario where they would need to flee the US and seek safety in Israel in the future. For good reason, they felt very safe and comfortable as Jews living in America. The recent jump in antisemitic incidents clearly puts this sense of security under attack. 

As a wealth manager with presence in both New York and Tel-Aviv, we are now increasingly approached by wealthy American Jews who are considering opening an account in Israel. Given rising antisemitism in the US, these wealthy families are now incorporating an Israeli backup account as part of their wealth risk management strategy: For a family with significant wealth, it could make sense to set aside a few million dollars to deal with the risk, even if still perhaps somewhat remote, that they would need, or want, to leave the US on short notice. 

In recent years, as the international tax reporting, anti-money laundering and investment advisory regimes have tightened significantly, it has become difficult for foreign residents to open and maintain bank accounts in Israel – and there has been a significant drop in the number of new accounts opened. Israeli banks have become concerned that money parked in the accounts was not reported to the US tax authorities. Furthermore, they started to enforce US investment advisory law: Investment accounts of US residents can only be managed by investment advisors that are registered and supervised by US regulatory authorities. Although more difficult than in the past, it is not impossible to open such accounts – for the benefit of all sides involved. If Israeli banks get adequate safeguards, American Jew families can enjoy the safety of an Israeli backup account.