The government is expected on Sunday to approve a budget of NIS 72 million ($21.2 million) to expedite the establishment of a company whose job it will be to transfer funds to the Palestinian Authority.
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In the proposal presented to ministers, it was claimed that although such a company was already formed in 2019, it still wasn't up and running.
"In light of the complexities of the measure and the various delays, we will have to implement adjustments," the proposal said.
The proposal didn't detail the nature of the delays and why the country needs to allocate NIS 72 million to overcome them.
According to the draft approval that the government is expected to sign on Sunday, the sum will represent a "shareholder loan" to the company. With that, the draft document already accounts for the possibility that the loan won't be repaid, and that in such a scenario, a proposal will be presented to the Knesset Finance Committee to change the status of the loan to a grant.
The proposal was submitted to the government by Defense Minister Benny Gantz and Finance Minister Avigdor Lieberman.
The backdrop to the proposal is a concern that legal action could be taken against Bank Hapoalim and Bank Discount after many years of contact with Palestinian banks. Israeli intelligence and international reports have suggested that Palestinian banks don't meet international standards in relation to money transfers to terrorist groups and measures against money laundering – and that Israeli banks would be required to sever ties.
To assume the risks involved in money transfers to the PA, in 2019 the government established the government-owned company "Correspondent Services LTD."
However, even three years after its creation, it still isn't active, likely due to those same legal and financial risks that have troubled the banks.
Now the government is pursuing a dedicated law that doesn't exist in relation to other government-owned companies. The law seeks to allow Israeli employers to pay their Palestinian workers in an organized fashion as opposed to with cash. Additionally, the government wants to provide the company with protections against lawsuits from victims of terror or international investigations targeting money laundering.
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