Israeli Finance Minister Orders Cancellation of Waiver on Cooperation with Palestinian Banks

Reuters

12:57 JST, June 11, 2025

June 10 (Reuters) – Israel’s Finance Minister Bezalel Smotrich ordered on Tuesday the cancellation of a waiver on cooperation between Israeli and Palestinian banks, in a move that puts the Palestinian banking system at risk.

Smotrich said the decision came against the “delegitimization campaign” by the Palestinian Authority against Israel globally, according to a statement from his office.

The waiver had allowed Israeli banks to process shekel payments for services and salaries tied to the Palestinian Authority, without the risk of being charged with money laundering and funding extremism.

Without it, Palestinian banks would be cut off from the Israeli financial system.

The decision comes as the Palestinian Authority continued to face mounting financial pressure from a slowdown in aid, a squeeze on a system of tax revenue transfers by Israel and a slump in contributions from Palestinians who have been shut out of the Israeli labour market by the war in Gaza.

It comes hours after the United Kingdom and four other nations imposed on him and another far-right minister sanctions for inciting violence in the West Bank. The sanctions included a freeze on assets and travel bans.