US says Israeli banks don’t have to close accounts of sanctioned settlers

Letter clarifying policy comes after several banks denied those sanctioned access to their assets, infuriating treasury chief, who threatened to take revenge on PA, source says

Jacob Magid is The Times of Israel's US bureau chief

Illustrative: Israeli soldiers speak with Israeli settlers in the West Bank town of Huwara near Nablus on February 27, 2023. (RONALDO SCHEMIDT / AFP)
Illustrative: Israeli soldiers speak with Israeli settlers in the West Bank town of Huwara near Nablus on February 27, 2023. (RONALDO SCHEMIDT / AFP)

The US informed Israel this week that the Biden administration’s sanctions against violent settlers are not intended to compel Israeli banks to close the accounts of targeted individuals, an Israeli official told The Times of Israel.

The clarification, sent in a letter from the US Treasury Department to the Bank of Israel and obtained by The Times of Israel, is intended to cool anger from Israel’s treasury chief over the fact that sanctioned individuals had lost access to local banking services, due to fears of violating the US penalties.

Several major banks froze the accounts of those slapped with sanctions by US President Joe Biden’s administration earlier this year after the White House determined that the Israeli government was systematically failing to clamp down on settler violence.

The sanctions have infuriated Finance Minister Bezalel Smotrich, who characterized them as a draconian obstruction of Israeli sovereignty. In response, the far-right lawmaker threatened to take steps in his capacity as head of the treasury that would significantly impede the Palestinian economy, the Israeli official added, confirming a Thursday report in the Israel Hayom daily.

Ostensibly wary of such retaliatory actions, the US administration agreed to send a letter to the Finance Ministry clarifying that the sanctions were not intended to cut off those targeted from the entirety of their assets.

According to the US clarification, those named in the sanctions should still be allowed to access their bank accounts for basic sustenance purposes. Purchases beyond this scope, including foreign transactions will remain barred, the letter noted, giving Israeli banks the nod to partially re-open the accounts of the handful of settlers targeted, according to the Israeli official.

Finance Minister Bezalel Smotrich during a vote on the state budget at the assembly hall of the Knesset, in Jerusalem, March 13, 2024. (Yonatan Sindel/Flash90)

Responding to a query on the matter, a US State Department spokesperson told The Times of Israel, “The US condemns extremist settler violence that threatens the peace, security and stability in the West Bank.”

“The administration intends to enforce fully sanctions imposed under the recently issued EO 14115 and promote accountability for those engaged in these violence activities,” the spokesperson added.

Since February 1, the US has imposed sanctions on seven settlers accused of violent extremism in two batches. The second round also included two illegal outposts.

A third round is expected in the coming weeks, a US official told The Times of Israel earlier this month, adding that the US plans to add new names to the list every month or so.

Those liable under the sanctions are not only the violent individuals themselves but also entities that have financial interactions with them.

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