It is well known that many Jewish families and individuals from the Diaspora have opened accounts in Israeli banks since the foundation of the state and it is no secret that the inflow of such foreign capital to the State of Israel has significantly contributed to the development and re-enforcement of the economy.Representatives of all the large Israeli banks traveled over the years to many countries, knocking on the doors of community heads and chasing Jewish HNW’s (High Net Worth individuals) to open accounts in Israel.It followed that over the years many billions were credited to the local banks, but the funds were not always (and probably in most cases never) reported in the country of origin of those good Jews, who viewed Israel as an alternative to Switzerland. Moreover the reporting requirements were not prevalent until recently.However, with the enactment of the US legislation known as FACTA, we are witnessing how, over the past two years and particularly over the past months, those Jews have a serious problem and are actually trapped. While the rest of the world is addressing the new policy of obligatory reporting in an orderly manner, Israel has dealt a blow to thousands of Jewish people; simply put, if you don’t report and pay your tax in your country of origin – you are in trouble.The banks in Israel are saying to non-residents, many of whom are aged Holocaust survivors who have maintained funds in Israel for decades, that they have one of two alternatives: Either they prove to us that the funds have been reported in their country of origin, or they remove the funds, provided that the funds are transferred to an account in their name in another country. This creates a virtually impossible situation, since opening a new account without the ability to prove that you are tax compliant in respect of the funds concerned in your country of residence – is now all but impossible.The Israeli banks know that Israel will be exchanging information (most likely from 2018) automatically with other countries, but they are unable to inform their customers when this will happen and if it will be retroactive.It follows that from being a country where there were no compliance and regulatory rules, we have in one fell swoop transformed to a territory of absolute obligatory reporting, without any preparation or guidance for customers. The banks have decided, for their clients, to embark on a voluntary disclosure course, but have not given the customers any advanced warning as to what they have to do in order implement this policy. Take as an example a Holocaust survivor aged 80 who was born in Poland and lives abroad. She sought my advice after she discovered only one-and-a-half years ago, following the death of her husband, that she has some $5 million held in two local banks, which have not been declared in her country of residence.She now cannot touch the funds, which she needs for her subsistence, and cannot even gift any of the funds to her two children who live in Israel.While the Swiss banks have set down definitive dates in advance so as to enable their customers to organize their affairs appropriately, in Israel there is pure uncertainty; nobody knows what to advise and there is no finite policy.One particular sector that is suffering from this uncertainty are new immigrants, who have already arranged all their affairs overseas and are not supposed to be concerned with Israel from a tax standpoint (they have a tax holiday for 10 years). If they now wish to draw funds from overseas, they have to prove that the funds they are bringing into Israel have been reported in the country from which they have emigrated. For example, “A” immigrates to Israel in 2009 from South Africa and his funds are held by a trust in Switzerland, which trust wishes to award part of the funds to him. “A” now has to prove to the bank officer in Israel that these funds have been reported in South Africa prior to his aliya and for this purpose he has to bring a certificate from a South African Accountant! Israel indeed needs to draw a line with regard to the international battle against undeclared funds – however, it must remember that it is different from the other countries because it has been a “haven of refuge” for Jews. The State of Israel should have found the modus to give advance warning to foreign customers of the banks that there is a problem, that problem should have been defined, and customers should have been given the opportunity of removing their funds at their discretion.We certainly should not have reached a situation where nobody has answers.The author is a senior partner at Michael Shine & Partners, one of the leading law firms in Israel in the field of trusts, protection of family wealth and private client consulting. She is also a director of the Family Office, M.S.A. Shine Global Family Office Limited.