According to a report monday in London’s Financial Times newspaper, the Palestinian Authority may be forced to abandon the Israeli shekel and adopt the Jordanian dinar as its currency as a result of restrictions on the transfer of funds since Hamas came to power.
George Abed, governor of the independent Palestine Monetary Authority, said he had urged the Bank of Israel to find ways to ensure that legitimate financial transactions could continue after the two Israeli commercial banks that supply shekels decided to sever ties with their Palestinian counterparts.
“Otherwise we will have to do away with the shekel and adopt the Jordanian dinar,” he told the Financial Times.
Abed added that U.S. restrictions were making it extremely difficult for Palestinian monetary and financial authorities to monitor financial transactions for suspicious activity that could be connected to ‘terrorist activity’, instead imposing a ‘blanket-ban’ on the entire Palestinian population — a move he says will not stop terrorism, but will have the opposite effect. “AML/CFT (Anti-Money Laundering and Combating the Financing of Terrorism) does not allow a blanket ban on an entire country, otherwise there would be no banking in the world,” he said.
Abed noted that Israel has adequate legal safeguards to monitor suspicious transactions and to freeze suspect funds under laws to combat money laundering and the financing of terrorism, and that the Palestinian Authority was drafting legislation to the same effect, but the process was being hindered by a US and European ban on experts advising the relevant Hamas government ministries.
“It’s a shame, because the international community had been pressuring the PA on this issue,” Mr Abed said. “As I told the Americans, they are shooting themselves in the foot.”