Israel: Law on Freezing 

Revenues Designated for the 

Palestinian Authority

March 2019 

The Law Library of Congress, Global Legal Research Directorate 

(202) 707-5080 (phone) • (866) 550-0442 (fax) • law@loc.gov • http://www.law.gov
This report is provided for reference purposes only. 

It does not constitute legal advice and does not represent the official 

opinion of the United States Government. The information provided 

reflects research undertaken as of the date of writing. 

It has not been updated.
The Law Library of Congress, Global Legal Research Directorate

(202) 707-5080 (phone) • (866) 550-0442 (fax) • law@loc.gov • http://www.law.gov

Contents

I. Introduction............................................................................................................................................ 1

II. PA Payments to Prisoners and Families of Terrorism Offenders................................................... 2

III. Developments Leading to Adoption of the FFPA Law .................................................................. 3

A. 2017 Cabinet Decision to Immunize Banks from Financing Terrorism Claims..................... 3

B. Government Draft Bill.................................................................................................................... 4

IV. The FFPA Law...................................................................................................................................... 5

A. Initial FFPA Bill’s Explanatory Notes......................................................................................... 5

B. The FFPA Law’s Objective............................................................................................................ 5

C. FFPA Definitions............................................................................................................................ 6

D. FFPA Law’s Reporting Requirements ........................................................................................ 6

E. Freezing of Funds........................................................................................................................... 7
The Law Library of Congress 1

Israel: Law on Freezing Revenues Designated for the 

Palestinian Authority 

Ruth Levush 

Senior Foreign Law Specialist

SUMMARY In accordance with the Paris Protocol and Israeli domestic implementing legislation, 

Israel has been transferring tax revenues to the Palestinian Authority (PA) on a monthly 

basis. The Israeli Defense Cabinet decided on February 17, 2019, to freeze that portion 

of these revenues equal to expenditures by the PA in the previous year for payments to 

families of people killed, injured, or imprisoned for attacks on Israel. The government’s 

authority to deduct amounts paid by the PA to terrorism operators and their families 

from its revenue transfers derives from a July 8, 2018, legislation. A precondition for 

freezing revenues is the submission of a yearly report by the Minister of Defense on 

such PA payments to the Ministerial Committee for Matters of National Defense and 

the Committee’s approval. The Law does not expressly authorize the use of frozen 

funds for enforcement of judgments against terrorist act perpetrators or for furthering 

antiterrorism projects. 

I. Introduction

On February 17, 2019, the Israeli Defense Cabinet reportedly1 decided to enforce July 2018 

legislation authorizing the freezing of funds from the total revenues it transfers to the Palestinian 

Authority (PA) in accordance with Israeli domestic legislation for implementation of the IsraeliPalestinian Interim Agreement (the Paris Protocol).2 According to a media report, the amount 

deducted from the revenues transferred to the PA under the Israeli legislation equals 500,000,000 

New Israeli Shekels (about US$138,222,500).3

1 Noa Landau & Jack Khoury, Israel Freezes Transfer of 500 Million Shekels of Palestinian Authority 

Taxes, HAARETZ (Feb. 17, 2019), https://www.haaretz.com/israel-news/israel-freezes-transfer-of500-million-shekels-of-palestinian-authority-taxes-1.6941078, archived at https://perma.cc/BG4H8F5A. 

2 Gaza-Jericho Agreement, Annex IV, Protocol on Economic Relations between the Government of 

the State of Israel and the P.L.O., Paris, Apr. 29, 1994, https://mfa.gov.il/mfa/foreignpolicy/peace/ 

guide/pages/gaza-jericho agreement annex iv - economic protoco.aspx, archived at

https://perma.cc/ V28G-S4KK. Implementing Israeli legislation includes the Implementation of the 

Agreement on the Gaza Strip Law and the Jericho Area (Economic Arrangements and Miscellaneous

Provisions) (Legislative Amendments) 5755-1994, Ch. E, SEFER HAHUKIM [SH] [BOOK OF LAWS

(official gazette)] 5758 No. 1497 p. 66, as amended, and Implementation of the Agreement regarding 

the Preparatory Transfer of Powers to the Authority (Legislative Amendments and Miscellaneous 

Provisions) Law, 5755-1995, Ch. B., SH 5758 No. 1526 p. 325. 

3 Landau & Khoury, supra note 1.
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The Palestinian Authority rejected its regular monthly tax transfer from Israel to protest the Israeli 

decision to deduct sums of money the PA has payed to the families of people killed, injured, or 

imprisoned for attacks on Israel.4

The government’s authority to freeze revenues derives from a July 8, 2018, legislation, the 

Freezing of Funds Paid by the Palestinian Authority in Connection with Terrorism from 

Revenues Transferred by the Israeli Government, Law 5778-2018 (FFPA Law).5

This report provides information on the legal developments that led to the adoption of the FFPA 

Law and its provisions. 

II. PA Payments to Prisoners and Families of Terrorism Offenders

On January 1, 2018, Israel’s Ministry of Defense released the following “fees list” paid by the PA 

to persons held in Israeli prisons for terrorism offenses. The list is allegedly based on PA 

data sources: 

Definition of the Prisoner Monthly Pay 

Imprisonment of 3-5 years 2,000 NIS6

Imprisonment of 20-35 years 10,000 NIS for life 

Married Terrorist 300+ NIS 

Terrorist with Children 50+ NIS per child 

Terrorist from Jerusalem 300+ NIS 

Israeli [citizen] Terrorist 500+ NIS 

Source: Data from Israeli Ministry of Defense as reported by Yoav Ziton, The 

PA Fees List Paid to Terrorists was Exposed, YNET (Jan. 1, 2018), https://

www.ynet.co.il/articles/0,7340,L-5068424,00.html (in Hebrew), https://

perma.cc/8SUZ-3KX3, and translated by the author, R.L. 

4 Mohammed Daraghmeh, Palestinian Authority Refuses Tax Revenues from Israel, AP NEWS (Feb. 27, 

2019), https://www.apnews.com/71513b8cacfb4d7d9cda91d942dac456, archived at https://perma. 

cc/68QT-K8SK. 

5 Freezing of Funds Paid by the Palestinian Authority (PA) in Connection with Terrorism from 

Revenues Transferred to It by the Israeli Government, Law 5778-2018, SH 5778 No. 2730 p. 732, 

https://fs.knesset. gov.il//20/law/20_lsr_502711.pdf (in Hebrew), archived at https://perma.cc/ 

P2QB-8ZLA. 

6 On January 1, 2018, 1 New Israeli Shekels (NIS) equaled US$ 0.29. 
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“For example, an Israeli terrorist, married with three children, who receives a life sentence, 

receives NIS 10,950 per month.”7

The data was reportedly disclosed in connection with a legal memorandum requiring the 

Minister of Defense to provide the Defense Cabinet with information on the annual payments by 

the PA to “terrorist operatives” at the end of each year, with the amount of such payments to be 

deducted from the money transferred to the PA by the Israeli government.8 According to then 

Defense Minister Avigdor Lieberman, “[t]he Palestinian Authority pays more than NIS 1 billion 

a year to terrorists and their families, thus encouraging and perpetuating terrorism. Stop it.”9

The FFPA Law appears to have provided a higher legal normative basis for the deduction of 

money paid by the PA to terrorism operatives and their families.10

III. Developments Leading to Adoption of the FFPA Law 

Concerns over the financial support provided by the PA to persons involved in terrorist attacks 

and their families have been mounting in recent years. Such concerns appear to have centered on 

Israel’s perceived indirect facilitation of such payments by providing immunity in 2017 to Israeli 

banks doing business with the PA, and more recently, on Israel’s transfers of revenue that enable 

the PA to make the payments. 

A. 2017 Cabinet Decision to Immunize Banks from Financing Terrorism Claims 

In an effort to protect the PA from financial collapse, the Israeli Cabinet reportedly adopted a 

decision in January 2017 to grant “immunity from prosecution in Israel for Bank Hapoalim and 

Bank Discount, and indemnification for claims that may be filed against them abroad, on 

suspicion of involvement in financing terrorism.”11 The decision was reportedly backed by US 

and European guarantees for indemnification in the case of lawsuits against the 

Israeli banks.12 Accordingly, 

. . . the arrangement with the Israeli banks will be for a period of two years. During this 

period, an alternative will be formulated that will transfer responsibility for the provision 

of services to Palestinian banks from Israeli private banks to another mechanism, probably 

the government. Representatives of the Ministry of Finance informed the Cabinet 

 

7 Yoav Ziton, The PA Fees List Paid to Terrorists was Exposed, YNET (Jan. 1, 2018), https://www.ynet. 

co.il/articles/0,7340,L-5068424,00.html (in Hebrew), https://perma.cc/8SUZ-3KX3. Translations 

from the Hebrew here and throughout this report by author, R.L. 

8 Id. 

9 Id. 

10 See discussion of the FFPA Law, infra, Part IV. 

11 Barak Ravid, For Fear of the Collapse of the PA: The Government Granted Immunity from Prosecution to 

Banks Working with the Palestinians, HAARETZ (Jan. 22, 2017), https://www.haaretz.co.il/news/ 

politics/1.3425881 (in Hebrew, by subscription), archived at https://perma.cc/DRJ5-VFSB. 

12 Id. 
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Ministers that the Governor of the Palestinian National Bank had sent an official letter in 

which he undertook to carry out all the necessary actions to ensure that the Palestinian 

banks comply with international standards regarding the prevention of money laundering 

and the financing of terrorism. 

A senior Israeli official said that Palestinian banks currently do not meet international 

standards regarding the prevention of terrorist financing. According to him, the Governor 

of the Palestinian Bank has undertaken to solicit a review by the International Monetary 

Fund and implement any recommendation given by the Fund to prevent money transfers 

to [support] terrorism or money laundering.13

Opponents of the 2017 arrangement have suggested that, 

[s]ince the Paris Protocol, the Israeli government, through Israeli banks, collects PA tax 

revenues from outside sources and transfers them to the Palestinian Authority. Since Israel 

is a signatory to the Anti-Money Laundering and Terrorism Financing Regulations, the PA 

can claim that it does not deal with terrorism if Israel transfers money to it.14 

B. Government Draft Bill 

Following the public disclosure of the “Fees List,” on March 12, 2018, the Israeli government 

submitted the Bill for the Deduction of Revenues Paid by the Palestinian Authority (PA) in 

Connection with Terrorism from Funds Transferred to It by the Israeli Government, 5778-

2018 (DRPA).15 

The DRPA contains similar provisions to those found in the private members bill that was finally 

adopted into law on July 2, 2018. The DRPA bill, however, had contained special provisions 

regarding the management of frozen funds and their potential use for compensation of victims 

of terrorism and special antiterrorism efforts.16 Such provisions were not included in the final text 

of the FFPA.17

 

13 Id. 

14 Ami Rojkes Dombe, This Is How Israel Cleans Palestinian Money from the Stain of Terrorism, ISRAEL 

DEFENSE (Jan. 23, 2017), https://www.israeldefense.co.il/node/28294 (in Hebrew), archived at 

https://perma.cc/RH6A-KGE4. 

15 Deduction of Revenues Paid by the Palestinian Authority in Connection with Terrorism from 

Funds Transferred to it by the Israeli government, Government Draft Bill 5778-2018 (DRPA Bill), 

HATSAOT HOK HAMEMSHALA [GOVERNMENT BILLS (official gazette)] No. 1214, p. 845 (Mar. 12, 2018), 

https://fs.knesset.gov.il//20/law/20_ls1_491151.pdf (in Hebrew), archived at https://perma.cc/ 

S87H-JJD5. 

16 Id. § 5(a)-(d). 

17 FFPA Bill No. 2015157, Bill’s Documents, https://main.knesset.gov.il/Activity/Legislation/ 

Laws/Pages/LawBill.aspx?t=lawsuggestionssearch&lawitemid=2015157 (in Hebrew), archived at 

https://perma.cc/T3UT-JEVT. 
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IV. The FFPA Law 

A. Initial FFPA Bill’s Explanatory Notes 

The FFPA bill was initially submitted as a private members bill on March 20, 2018.18 Explanatory 

notes of the initial draft bill provided as follows: 

According to Palestinian law, the greater the punishment imposed on the Palestinian 

terrorist, namely, the more severe the injury to the State of Israel and its residents, the 

greater the salary to which [the terrorist] is entitled. Many of the terrorists receive a much 

higher salary than the average wage per employee in the Palestinian Authority. In 

addition, the terrorists gain fame from the PA and its leaders. 

For example, a terrorist involved in the murder of 66 Israelis and sentenced to 67 life 

sentences has received a sum of NIS 700,000 since his arrest in 2002. 

While we are complaining to the world that the Palestinian Authority supports terrorism, 

the State of Israel is doing so to a considerable extent. It regularly transfers tax revenues it 

collects for the PA in accordance with Annex 5 to the Israeli-Palestinian Interim Agreement 

on the West Bank and the Gaza Strip (the “Paris Protocol”), without taking into account 

the PA’s support for terrorism through these funds. 

Therefore, it is proposed to deduct from any amount transferred to the Palestinian 

Authority [an amount based on] a government decision on the rate of Palestinian 

Authority support for terrorism during the past year. This rate will be determined in a 

report to be published by the Minister of Defense on the basis of data published by the 

Palestinian Authority at the end of each fiscal year.19

The following is a summary of the pertinent provisions of the final version of the FFPA as 

adopted on July 2, 2018. 

B. The FFPA Law’s Objective 

According to the FFPA, 

[t]he purpose of this law is to reduce terrorist activity and to eliminate the economic 

incentive for terrorism activity by setting provisions for the freezing of funds paid by the 

Palestinian Authority in connection with terrorism, out of the funds transferred by the 

Israeli government to the Palestinian Authority according to provisions under 

implementing laws.20 

 

 

18 Id. 

19 Id. at 3. 

20 Freezing of Funds Paid by the Palestinian Authority (PA) in Connection with Terrorism from 

Revenues Transferred to It by the Israeli Government, Law 5778-2018, § 1, SH 5778 No. 2730 p. 732, 

https://fs.knesset.gov.il//20/law/20_lsr_502711.pdf, archived at https://perma.cc/P2QB-8ZLA.
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C. FFPA Definitions 

1. Definition of “Amount Paid by the PA in Connection with Terrorism” 

The FFPA defines an “amount paid by the PA in connection with terrorism” as including money 

or monetary value, paid by the PA directly or indirectly for each of the following: 

(1) For a terrorist operative, during his imprisonment or detention or after his release, or 

to members of his family, for being a terrorist operative; 

(2) For a prisoner or a detainee who is not a terrorist operative during his imprisonment 

or detention or after his/her release, or to his/her family, due to the commission of or 

attempt to commit an offense that causes harm to state security or public security.21

2. Definition of “Terrorist Operative” 

For the purpose of implementation of the FFPA, a “terrorist operative” is generally defined as a 

person convicted of a terrorism offense under a list of specified laws, or a person who is held in 

custody due to suspicion of having committed such an offense.22 The definition also applies to a 

person held in detention under the Emergency Powers (Detentions) Law 5739-1979, or who has 

been convicted by a military court under relevant provisions in Israel or in Judea and Samaria 

(the West Bank).23 Alternatively, the definition includes persons held under military orders or 

temporary detention orders concerning unlawful combatants24 and those who committed 

terrorism and security offenses but have not been indicted or were killed in the course of 

committing or attempting to commit them.25

D. FFPA Law’s Reporting Requirements 

The FFPA Law requires the Minister of Defense to submit for the approval of the Ministerial 

Committee for Matters of National Security (Ministerial Committee) a report at the end of each 

year detailing the “amount paid by the PA in connection with terrorism” in that year.26 In 

addition, the Minister must present the report to the Knesset Foreign Affairs and 

Defense Committee.27

 

21 Id. § 2 (definition of “amount paid by the PA in connection with terrorism”). 

22 Id. § 2(a)-(b) (definition of “terrorism operative”). 

23 Id. § 2(c)-(d). 

24 Id. § 2(e)-(f). 

25 Id. § 2(g). 

26 Id. § 3(a). 

27 Id. § 3(c). 
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If freezing of funding was carried out in the year prior to the submission of the report, the report 

should include, in addition to the “amount paid by the PA in connection with terrorism,” data on 

the impact of the said freezing on national security and foreign affairs of the state.28

The report may be published by the Minister after its approval by the Ministerial Committee, 

unless the publication may constitute a threat to state security.29

E. Freezing of Funds 

The FFPA requires the freezing of an amount equal to one-twelfth of the total funds paid by the 

PA in relation to terrorism in the previous year from monthly revenues transferred by the 

Government of Israel to the Palestinian Authority. The total amount paid by the PA in relation to 

terrorism is based on data included in the annual report as approved by the 

Ministerial Committee.30

The FFPA further provides for the transfer of frozen funds to the PA in full or in part, in the event 

that the report submitted by the Minister and approved by the Ministerial Committee indicates 

that the PA has not made payments in connection with terrorism in the year covered by the report. 

The decision of the Ministerial Committee to transfer frozen funds must be published.31 

 

28 Id. § 3(b). 

29 Id. § 3(d). 

30 Id. § 4(a). 

31 Id. § 4(b).