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Israel extends waiver allowing Palestinian banking ties

Israel’s National Security Council said that severing banking ties with the PA would have ‘significant negative consequences’ for Israel’s security and foreign relations.

By Pesach Benson, TPS

Israel’s Security Cabinet on Thursday night extended a waiver allowing Israeli banks to cooperate with Palestinian ones for another year.

The waiver allows Israeli banks to process shekel payments for services and salaries associated with the Palestinian Authority without running afoul of laws against terror-funding and money laundering.

Palestinian banks process PA stipends for imprisoned terrorists and their families.

Israel came under heavy US and European pressure as diplomats argued that without the waiver, the Palestinian Authority economy would collapse.

An opinion presented by Israel’s National Security Council said that severing banking ties with the PA would have “significant negative consequences” for Israel’s security and foreign relations, warning such a move would increase Palestinian terror financing and money laundering.

The new waiver expires at the end of November 2025.

The Palestinian Authority allocates seven percent of its annual budget for its so-called “Martyr’s Fund,” which provides the stipends. The size of the monthly payouts is primarily determined by the duration of the terrorist’s incarceration, with a negligible additional factor based on family size.

Ramallah has been paying out stipends for years, but the issue came under a spotlight following the murder of Taylor Force, a U.S. citizen killed by a Palestinian who went on a stabbing rampage in Jaffa in 2018.

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Congress passed the Taylor Force Act, which halted U.S. aid to the Palestinians as long as terror stipends are being paid out.

U.S. assistance to the Palestinian Authority resumed under the administration of President Joe Biden. In December 2022, American victims of Palestinian terror filed a lawsuit against the President and Secretary of State Antony Blinken, arguing that the payments violate the Taylor Force Act.

Despite claiming to be operating at a 172% budget deficit, the Palestinian Authority in July recognized 899 new prisoners from Gaza and tens of thousands more Gaza “martyrs” as eligible for the “pay for slay” payouts.