Smotrich says banks bowing to EU sanctions against settlers may have to compensate them

Finance Minister Bezalel Smotrich condemns banks that have refused to provide services to Israeli settlers sanctioned by the European Union and warned that they may have to pay compensation to them.

The EU last year imposed sanctions on five Israeli settlers for violence against Palestinians, and Smotrich says there were reports of sanctions being considered against other settlers.

In a letter to the banking supervisor, Smotrich says banks should not follow a “zero risk” policy since it leads to the abandonment of Israeli clients, “under the guise of compliance with foreign sanctions.”

In a statement quoting his letter to the regulator, Smotrich calls on banks to use their legal, economic, and international strength to fight “unjust sanctions.”

“The banks’ enormous profits enable them to take measured risks on behalf of their clients — especially when it comes to a national moral injustice,” Smotrich, who leads the far-right Religious Zionism party, says.

Should banks continue to comply with sanctions and harm clients, Smotrich says he intends to promote immediate legislation that would require banks to pay substantial compensation to affected customers.

He also intends to require the Bank of Israel to offer banking services to citizens targeted by sanctions.

Responding to the letter, the Bank of Israel says that while banks must comply with international sanctions to avoid an array of risks, a draft directive it published today aimed to ensure appropriate banking services were available for the affected customers.

“Circumventing foreign sanctions regimes through the Israeli banking system exposes banking corporations to multiple risks, including compliance risks, anti-money laundering and counter-terror financing risks, legal risks, and reputational risks,” the central bank says.

However, it says it has taken steps to comply with sanctions “without banks resorting to blanket refusals to serve such customers.”