US warns against destabilizing Palestinian banking sector after Israeli banks move to cut ties

The US State Department warns against destabilizing the banking sector in the West Bank following a decision by two Israeli financial institutions to cease providing correspondent banking services for Palestinian banks in the coming weeks.

“The United States recognizes the importance of stable correspondent relationships to the implementation of President Trump’s Peace Plan,” a State Department spokesperson says in a statement to The Times of Israel.

Without specifically noting the Discount and Hapoalim decisions to end correspondent services in the coming weeks, the spokesperson welcomed Finance Minister Bezalel Smotrich’s recent decision to sign a waiver granting the banks indemnity to continue providing those services through the end of the year.

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“Destabilizing the banking sector and driving people towards cash and other unregulated payment systems is the antithesis of anti-money laundering best practices,” the spokesperson says.

“We expect Palestinian banks and the Palestinian Monetary Authority to enact and enforce strict reforms that conform to international anti-illicit financing standards and safeguards Israel has placed on the use of its currency,” the statement notes, adding that Washington would continue to hold the PA accountable for pledged reforms.