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Report: PA asked Bank of Israel to raise deposit size

Oct. 18, 2012 11:43 A.M. (Updated: Oct. 19, 2012 5:50 P.M.)
BETHLEHEM (Ma’an) – Israeli political sources say the Palestinian Authority recently asked the Bank of Israel to increase the limit of Palestinian Authority deposits to $2 billion, the Hebrew-language daily Yedioth Ahronoth reported Wednesday.

The report said officials of the Bank of Israel were surprised that the PA was asking to allow deposit of such a “mountain” of money while the PA leadership claims to be facing a severe financial crisis.

The report highlighted that Israeli officials were starting to have suspicions that the Palestinian Authority “is helping criminal Arab families” inside Israel with money laundering.

According to Yedoth, the Bank of Israel asked the PA through a mediator to provide some explanations about its financial activities, funds and trade credits among other matters related to the financial conditions. However, the PA has not replied yet, added the report.

The Palestinian Monetary Authority dismissed the report.

The authority responded in a statement that the allegations were unfounded and "null and void" and that it strictly implements international anti-money laundering standards.

The World Bank in September praised the PMA for its "rigorous supervision and regulation of the banking sector, consistent with international practice."

"An Anti-Money Laundering law that was prepared in line with international standards with technical assistance from the IMF and USAID has been in force since October 2007," the World Bank report said.

Yedioth Ahronoth quoted Israeli banking sources saying the PA request to raise the deposit size would cause a negative trade balance between Israel and the PA. It would result in a deficit for the PA and naturally increase the demand for Israeli shekels in the West Bank rather than a surplus.

PMA governor Jihad al-Wazir said the surplus of Israeli shekels in the Palestinian market was the normal result of an increase in deposits in banks operating locally, estimated to be at least $7 billion.

It is also a result of the dynamic activities of the private sector, in addition to adopting the banking service expansion policy, where more than 20 branches have been opened in the past two years raising the total number of branches and offices to 232, al-Wazir said.

The number of customers using the banking system in Palestine has increased to 1.5 million, and the number of accounts opened at banks has risen to 2.6 million accounts, resulting in a continuous surge in deposits, he explained.

Al-Wazir also said Israel has been imposing restrictions and impediments against transfer of aggregate amounts at the Palestinian banks in shekels since 2007, and the necessary permits have not been granted despite the demands by the PMA to the Israelis for six months.

The PMA said the publication of the report was a "deliberate act" against the PMA in light of the current financial crisis, and reports mentioned in this respect are totally baseless.

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