Banks Hapoalim and Discount, which provide correspondent services to Palestinian Authority banks, are likely to postpone the decision to terminate their cooperation at the request of the Bank of Israel, Globes reports.
However, the publication notes that the final decision has not yet been made.
Earlier, two Israeli banks announced that they would stop providing correspondent services to the Palestinian Authority’s financial system starting in September due to legal and international risks associated with the ban on money laundering and terror financing.
However, a complete severance of relations could paralyze trade, lead to a monetary collapse of the Palestinian Authority and harm many Israeli companies.
As a long-term solution, the Israeli government previously approved the creation of a special state company that would take over the management of these activities and relieve responsibility from commercial banks. However, due to legislative and bureaucratic delays, the company has not yet begun work.
The current response to the Bank of Israel’s request is intended to buy additional time to develop a solution against the backdrop of strong international pressure, primarily from the US administration, which is trying to prevent the collapse of the Palestinian Authority.