US softens sanctions on blacklisted Israelis after threat from Finance Minister

The Biden administration informed the Finance Ministry that Israeli banks don’t need to prevent ‘transactions involving basic subsistence’ by citizens on the sanction list.


The Biden administration has clarified to Finance Minister Bezalel Smotrich that Israeli banks are not required to block all financial transactions of Israelis sanctioned for “undermining peace, security, and stability” in Judea and Samaria, Axios reported on Friday.

The U.S. Department of the Treasury issued the clarification after Smotrich threatened last week not to sign a waiver shielding two major Israeli banks with business ties to the Palestinian Authority from lawsuits stemming from charges of supporting terrorism.

The P.A.’s economy largely depends on its relationship with Israel. Accordingly, the Biden administration informed the Finance Ministry that there is no need for Israeli banks to prevent “transactions involving basic subsistence” by citizens who appear on the sanction list.

Israeli banks can process transactions “necessary to basic human needs or subsistence without exposure to OFAC [the Treasury’s Office of Foreign Assets Control] sanctions risk, provided these transactions do not involve the U.S. financial system or U.S. persons,” stated the letter, a copy of which was shared with Axios.

Israeli banks are also allowed to process transactions for “expenses essential for the survival of animals on farms that are blocked as a result of a designation of their owners,” the missive added.

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The letter lists several other examples of permitted transactions, including payments for medical care; childcare; basic housing; education; transportation; utilities; funeral expenses; and taxes or fees paid to the Israeli government.

“This guidance applies only to transactions involving basic subsistence and does not include large payments or expenses beyond basic living expenses or the kind of crowdfunding support that we have seem [sic] extremists use to raise funds internationally,” it noted.

In the coming days, Israeli officials will meet to discuss what the U.S. demands mean in practice.

Simcha Rothman, chairman of the Knesset Constitution, Law and Justice Committee and a member of Smotrich’s Religious Zionism Party, congratulated the minister, writing on X that “there are two important lessons here. 1. That a firm stand for the State of Israel’s sovereignty is not only a duty, but that it leads the world power to understand that it has crossed the line. 2. That [Smotrich] knows how to set this red line without flinching.”

On Feb 1., President Joe Biden issued an executive order sanctioning “persons undermining peace, security and stability” in Judea and Samaria, citing supposed “high levels of extremist settler violence, forced displacement of people and villages and property destruction.”

The White House initially named four Jews as the targets of its sanctions: Yinon Levi of Meitarim Farm; David Chai Chasdai of Givat Ronen; Einan Tanjil of Kiryat Ekron; and Shalom Zicherman of Mitzpe Yair. On March 14, the Biden administration announced sanctions against three more Judea and Samaria residents: Zvi Bar Yosef of Zvi’s Farm; Moshe Sharvit of Moshe’s Farm; and Neriya Ben Pazi of Rimonim Farm.

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Faced with the prospect of being cut off from the U.S. monetary system, Bank Leumi, Bank Hapoalim and the state-owned Postal Bank all took action against the Israeli citizens appearing on the sanction list.

The number of violent incidents committed by Jews against Palestinian residents of Judea and Samaria has continued to drop sharply, according to data presented to the Israeli Cabinet this month.

In the period from Oct. 7, 2023, when Hamas launched its war against the Jewish state, to Feb. 24, 2024, authorities registered 256 such incidents. This is compared to 489 incidents of nationalist crime committed by Jews in Judea and Samaria, including 26 attacks on Israeli security forces, between Oct. 7, 2022, and Feb. 24, 2023.

The report presented to decision-makers in Jerusalem comes against the background of Israel Defense Forces and Israel Police data also showing that Jewish violence in Judea and Samaria has been decreasing. Earlier this year, Israeli Foreign Minister Eli Cohen called reports of growing “settler violence” a “blood libel” and “a lie disconnected from reality.”