Banks Threaten Legal Action Against Communications Ministry Over Financial Fraud

The Union of Banks in Israel has issued a formal notice of legal proceedings, including a potential petition to the High Court of Justice, against the Ministry of Communications. The banks accuse the ministry of failing to address rampant financial fraud, phishing, and phone line hijacking by not utilizing its authority to close security vulnerabilities in cellular networks.

According to data revealed by TheMarker, financial fraud is costing the Israeli public hundreds of millions of shekels annually. The National Cyber Directorate reported a 35% increase in phishing attacks in 2025. Banks argue that security gaps in telecommunications companies' systems are the primary entry point for attackers and are calling for stricter identity verification during number porting and for information-sharing mechanisms to be established.

Eitan Madmon, CEO of the Union of Banks, criticized the ministry's regulatory approach, stating, "It appears that until now, the Ministry of Communications has seen itself primarily as a guardian of the telecommunications companies' interests and less as a guardian of the public interest."

The Ministry of Communications rejected these accusations, asserting, "First and foremost, the responsibility for identifying their customers, verifying their identities, and approving transactions of their funds lies with the financial institutions themselves."

This mutual blame between the financial system and the communications regulator leaves the public exposed to evolving digital threats, amplified by artificial intelligence tools. The dispute is expected to be settled in court, determining the boundaries of responsibility between telecommunications companies and banks if a joint working mechanism is not developed.