U.S. citizens have been barred from financial dealings with the Palestinian Authority because it’s controlled by Hamas, which the government designates a terrorist organization, the Treasury Department said.

The U.S. government’s ban adds to international pressure on the new Palestinian government to renounce terrorism and work toward peace with Israel.

"U.S. persons are prohibited from engaging in transactions with the PA unless authorized by Treasury’s Office of Foreign Assets Control", Molly Millerwise, a Treasury spokeswoman, said today in Washington. "There has been no change in OFAC’s licensing policy with respect to any other dealings with Hamas. Such transactions continue to be prohibited."

The U.S. and its allies are limiting financial assistance to the Hamas-led government to pressure its leaders to renounce violence. Hamas, a group that has bombed Israelis and refuses to recognized Israel’s right to exist, won parliamentary elections on Jan. 25. Hamas leaders have stuck with the group’s positions since taking power.

The U.S. already classifies Hamas, formally called the Islamic Resistance Movement, as a terrorist group. On April 12, the Treasury determined Hamas has a "property interest" in the transactions of the Palestinian Authority, extending its sanctions on terrorist financing to the Palestinian government.

That followed a pledge by the U.S. State Department last week to stop giving the Palestinian government money for roads, sewers and police. State said that it would instead shift about $92 million from those programs to food, education and other direct help to Palestinians.

Europe Stops Aid

The European Union also suspended aid payments to the Palestinian Authority last week, and Secretary-General Kofi Annan said through a spokesman on April 11 that he would limit United Nations contacts with the Palestinian government until the Hamas-led cabinet renounces terrorism and recognizes Israel.

While issuing its determination on Hamas, the U.S. Treasury also granted permission for some individuals to deal with the Palestinian Authority, including Americans employed by the governments of Egypt, Jordan and Israel or conducting official business for the United Nations.

Treasury also said it would permit transactions related to travel in the West Bank of Gaza and payments of taxes owed by Americans to the Palestinian Authority.

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