Israel grants local banks immunity from terror financing lawsuits – report

Israel grants local banks immunity from terror financing lawsuits – report

2-year exemption aims to keep Israeli banks from withdrawing financial services from the fragile Palestinian banking system

Offices of Discount and Hapoalim banks in  the center of Tel Aviv (Miriam Alster/ FLASH90)
Offices of Discount and Hapoalim banks in the center of Tel Aviv (Miriam Alster/ FLASH90)

The state has reportedly granted two Israeli banks immunity from lawsuits accusing them of financing terrorism, in a bid to prevent them from ending cooperation with Palestinian banks.

According to a report Sunday in the Haaretz daily, the unusual decision was taken by the cabinet last week out of concern that if Israeli banks end the crucial financial services they supply to their Palestinian counterparts, it could lead to the collapse of the Palestinian banking system and even the Palestinian Authority.

The move comes after Israel’s Bank Hapoalim reportedly informed the government last year that it intended to end its services to Palestinian banks out of fears it could face charges from overseas, particularly from the United States, for potentially violating terrorism funding and money laundering laws.

According to the report, Hapoalim is the main bank provider to Palestinian banks of clearing, guarantees and other services that enable them to conduct international trade. Israel Discount Bank also works with the Palestinian banks.

The two banks have asked the state to provide them with legal and financial protections, to facilitate their continued work with their Palestinian counterparts.

The cabinet decided to approve the recommendations of a special team from the finance, justice, defense and foreign ministries, which had been working together with representatives of the intelligence community for 10 months to find a solution to the issue, the report said, quoting a senior official.

The immunity would be given for a period of two years, during which the state would seek an alternative way to support the Palestinian banks, the report said, most likely by transferring the responsibility from private banks to the government.

During that period, the Palestinian banks would also work to improve on meeting international standards for combating money laundering and terror financing.

Join us!
A message from the Editor of Times of Israel
David Horovitz

The Times of Israel covers one of the most complicated, and contentious, parts of the world. Determined to keep readers fully informed and enable them to form and flesh out their own opinions, The Times of Israel has gradually established itself as the leading source of independent and fair-minded journalism on Israel, the region and the Jewish world.

We've achieved this by investing ever-greater resources in our journalism while keeping all of the content on our site free.

Unlike many other news sites, we have not put up a paywall. But we would like to invite readers who can afford to do so, and for whom The Times of Israel has become important, to help support our journalism by joining The Times of Israel Community. Join now and for as little as $6 a month you can both help ensure our ongoing investment in quality journalism, and enjoy special status and benefits as a Times of Israel Community member.

Become a member of The Times of Israel Community
read more: