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Treasury outs Hamas’s bank

March 23, 2010

Last Thursday, the U.S. Treasury Department designated the Islamic National Bank in Gaza as being controlled by Hamas.  The Wall Street Journal offered more context on the decision than most news outlets:

WASHINGTON—The U.S. Treasury put two Gaza institutions, Islamic National Bank and Al-Aqsa Television, on its terrorist-financing list as part of its effort to contain Hamas financially because, it said, they were controlled by the militant group.

The designation prohibits U.S. firms or individuals from doing business with the companies, and essentially tries to cut them off from international financing. The U.S. considers Hamas, which runs Gaza politically and militarily, a terrorist organization.

The fight over Islamic National Bank is part of a long-running battle between the U.S., Israel and the Palestinian Monetary Authority—the banking regulator on the West Bank—to limit the Hamas organization’s ability to operate and its ability to do business overseas. Hamas generally gets its funding from abroad, and the money is largely smuggled into Gaza from Egypt, according to PMA and Israeli officials.

The chairman of Islamic National Bank, Ala Rafati, denied the U.S. allegations that the bank was affiliated with Hamas. “They are involving us in politics. We are not at all involved,” he said. “We are a private bank that has been registered through the proper procedures.”

Al-Aqsa Television didn’t respond immediately to requests to comment.

The PMA has worked to block Hamas from using banks in Gaza and elsewhere. In response, according to the U.S. Treasury, Hamas opened Islamic National Bank in April 2009 after two years of planning. Hamas officials “authorized” the bank and provided $20 million in initial capital, the Treasury said.

In May 2009, Hamas’s finance office in Gaza deposited €1.1 million ($1.5 million) in the bank to pay salaries of the group’s military wing, the Treasury said, and opened accounts for Hamas members.

Jihad al-Wazir, the PMA’s governor, said in an interview that the monetary authority immediately tried to isolate the bank by denying it a banking license and prohibiting other banks in Gaza and the West Bank from doing business with it. The PMA also advertised in Gaza newspapers and radios, warning the local population not to do business at the bank. He also pressed central bankers from Arab nations to bar banks in their countries from doing business with Islamic National Bank.

In addition, Mr. al-Wazir says, he tried to place a warning ad in a Hamas newspaper. He says the newspaper first bargained to increase the cost of the ad and ultimately rejected it as a “political advertisement.”

“It’s not really a bank,” Mr. al-Wazir said. “It’s a money changer.” He said that Treasury’s decision “won’t add or subtract to the measures we have already taken.”

Read the rest of the WSJ article here.

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