US Treasury grants limited Israeli bank account access amid sanctions dispute

ISTANBUL

The US Treasury Department issued a letter to the Bank of Israel that outlined provisions for settlers involved in attacks against Palestinians to utilize their bank accounts for humanitarian needs.

“Israeli banks can process transactions for sanctioned individuals under E.O. 14115 for basic needs like food, medical care, housing, and taxes, without US sanctions risk if not involving the US financial system or persons,” it said.

This decision comes amid a contentious standoff between American officials and Israeli Finance Minister Bezalel Smotrich on the imposed sanctions and alleged concessions.

“The US letter emphasized that the guidance applies only to transactions involving basic subsistence and does not include large payments or expenses beyond basic living expenses or the kind of crowdfunding support that we have seem extremists use to raise funds internationally,” Axios’ Middle East correspondent Barak Ravid wrote on X.

“US officials say that contrary to Finance Minister Smotrich’s claims, there was no US concession on the sanctions,” said Ravid. “They emphasize it wasn’t part of a ‘deal’ with Smotrich to make him withdraw his threat to cut off the Palestinian banks from the Israeli banking system,” he added.

He stressed that Israel sought clarification on the implications of the sanctions following two rounds of enforcement, according to a US official.

The US underscored that such a move would not only “adversely” affect Palestinians but also Israeli companies.

The US Treasury Department reiterated its stance that Israeli banks maintaining ties with Palestinian banks in the West Bank will not face allegations of money laundering or terror financing.

“Last night, the Israeli cabinet authorized the Israeli banks to continue correspondence with Palestinian banks for another 3 months,” said Ravid, adding that, “An Israeli official said that without the US letter regarding the sanctions, Smotrich would not have allowed the decision to go through.”

A US official, however, denied what had been said.

“Did the letters help Bibi convince Smotrich to drop his threats? Possible. Did it help Smotrich to save face and spin it? Possible. But that’s their business. We didn’t make any deal with them,” he said. 

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