Reporting from Israel, legal consultant Dr. Omer Tene writes:
The Israeli Law, Information and Technology Authority (“ILITA”) has issued a new instruction (the “Instruction”) restricting financial institutions from using information concerning writs of execution issued against clients’ property. Pursuant to the Instruction, if a bank or insurance company finds out that a client’s account has become subject to a writ of execution, such information may not be used to deny the client credit or to adjust the rate of his or her insurance premiums. Information regarding writs of execution may be used only to carry out the writ. ILITA’s Instruction is based on the purpose limitation provisions in the Israeli Privacy Protection Act, 1981, as well as a specific section in the Execution of Judgments Act, 1967.
ILITA warns that failure to comply with the Instruction may constitute a criminal offense, as well as a civil tort. It further explains that financial institutions can legally obtain information about the execution of judgments against current or prospective clients under the Credit Bureau Services Act, 2002, which strikes a balance between clients’ privacy rights and the business interests of financial institutions.
The Instruction may have an effect on ILITA’s interpretation of similar situations, such as financial institutions using client information collected under anti-money laundering legislation for purposes beyond the scope of the Anti-Money Laundering Act, 2000 (such as fraud prevention or risk management).
The Instruction comes after a spate of recent instructions issued by ILITA on issues ranging from children’s privacy to outsourcing and identity authentication.