The Financial institution of Palestine, the central monetary establishment of the Palestinian Authority, has refused a request from Israel’s Finance Ministry to shut 3,400 accounts reportedly used to distribute funds to launched terrorists, two sources acquainted with the matter instructed The Jerusalem Submit on Friday.
The revelation emerged throughout a gathering of the safety cupboard on Thursday. The accounts are linked to the PA’s controversial “pay-for-slay” program, which supplies month-to-month stipends to Palestinians who have been imprisoned for finishing up terrorist assaults, in addition to to the households of these killed throughout such acts.
In keeping with the sources, Israeli authorities had beforehand submitted an specific demand to close down the accounts. In distinction to the same case a number of months in the past, when the financial institution agreed to shut 1,700 accounts within the West Financial institution and Gaza Strip, the financial institution’s administration this time responded that it was “unable to behave.” The prevailing evaluation is that senior PA officers instructed the financial institution to not comply.
The Finance Ministry recognized the accounts and warned the financial institution that failure to shut them may immediate Finance Minister Bezalel Smotrich to dam Israeli banks from persevering with to behave as correspondent banks for the Financial institution of Palestine.
Correspondent banks, comparable to Israel’s Low cost Financial institution and Financial institution Hapoalim, present providers that permit the Palestinian banking system to conduct worldwide transactions. As a result of Palestinian banks lack overseas branches, these Israeli establishments act as intermediaries. The State of Israel indemnifies the Israeli banks within the occasion that their providers facilitate cash laundering or the financing of terrorism.
Ought to the indemnification be revoked and middleman banking ties severed, monetary officers warn that the PA may face extreme financial penalties, doubtlessly even a collapse.
In June 2025, Smotrich introduced the cancellation of the indemnification amid what he described as a global delegitimization marketing campaign led by the PA in opposition to Israel.
“Towards the backdrop of the delegitimization marketing campaign… I instructed the Accountant-Basic to cancel the indemnification supplied to correspondent banks vis-à-vis banks working in Palestinian Authority territories,” Smotrich mentioned on the time.
Nonetheless, the transfer was finally postponed following strain from worldwide companions, together with the USA.
Now, with the Financial institution of Palestine persevering with to function a conduit for terrorist funds, the difficulty has returned to the cupboard’s agenda. In keeping with studies, senior US officers have privately warned PA leaders that the continuation of such funds may set off the imposition of non-public sanctions on high Palestinian officers.
The safety cupboard is anticipated to carry one other assembly on the difficulty on Sunday, throughout which selections could also be taken concerning the way forward for Israel’s monetary cooperation with Palestinian banks.
