Israeli banks cutting ties with Palestinian Authority
Discount Bank and Bank Hapoalim are halting bank transfers to the Palestinian Authority within two to three months, citing growing fears of involvement in terror financing. The banks demand the government establish a state-run correspondent bank to assume the risk, as promised four years ago. The issue now goes to Prime Minister Benjamin Netanyahu.
Discount Bank and Bank Hapoalim have surprised the Ministry of Finance by announcing they will halt bank transfers to the Palestinian Authority within two to three months, amid growing fears that such transfers finance terrorism. The banks demand the government take responsibility by operating a state-run correspondent bank, as promised four years ago under then-Finance Minister Avigdor Liberman. The plan stalled under current Finance Minister Bezalel Smotrich, who said no directors could be found for a bank transferring money to terrorist elements. The Bank of Israel opposes the move, warning of severe damage to both economies. The issue now goes to Prime Minister Benjamin Netanyahu, who must weigh diplomatic consequences. Trade with the PA was worth over NIS 21 billion in 2025. Experts warn the move may push transactions to cash, foreign currency, or crypto, reducing traceability of money laundering and terror financing.