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3 Jan 2024

Sebastian Shehadi, Novara Media

Palestine/Israel: Criticism against Wise and Payoneer for freezing the accounts of Palestinians in Gaza in disproportionate adherence to regulations; Incl. Co. comment

"Palestinians Are Having Their Bank Accounts Frozen. Their Banks Won’t Explain Why"
“Offline. Online. In every way I’m being targeted,” says Nadine Awed*, a Palestinian displaced in southern Gaza due to Israel’s ongoing invasion of the strip which has so far killed 22,000 Palestinians, most of them civilians. “I don’t know if me and my family will be killed in our sleep, and now I have even fewer options to find safety because I can’t access my money.”...

A growing number of Palestinians – Novara Media has spoken to 20 of them – who have been abruptly barred from accessing their money with online neobanks Wise and Payoneer, two of the services preferred by Palestinians for international money transfer and everyday transactions, without full explanation. Payoneer alone has roughly 30,000 Palestinian users in Gaza, not counting the many others in the diaspora.

The freezes have hit Palestinians in Gaza, the West Bank and Israel, as well as those living abroad. For many these are their primary bank accounts, containing funds needed to feed their families and treat injuries in a disease-riddled strip facing looming famine – or, for those with the right passports, the money to escape hell on Earth.

Evidence of the account blockages, shared exclusively with Novara Media, was first uncovered by Manara, a social enterprise that trains tech workers from the Mena region and then places them in global tech companies and start-ups, often through remote work.

Manara’s network includes roughly 400 Palestinians in its talent pool and more among its wider network of alumni and supporters. Of these, a dozen reached out to Manara to say that their Wise or Payoneer accounts had been blocked in the three weeks following Hamas’ 7 October attack on Israel. None were given a reason. Few have regained access to their accounts in the two months since...

But the roots of this scandal run deeper than Wise and Payoneer. Their actions expose an international system of financial regulation that has collectively punished Palestinian people for years – and is now going into overdrive...

Wise and Payoneer declined to provide details about individual cases for legal and privacy reasons. Both rejected any notion that they were discriminating against Palestinian customers. However, their responses to Novara Media’s questions suggested one possible reason for the account blockages: concern about breaching financial regulations, specifically anti-terror financing laws.

“As a regulated financial institution, we provide our service, where permitted by law, to customers regardless of their personal characteristics, including their nationality,” a spokesperson for Wise, which is headquartered in London, told Novara Media.

“We never take the decision to deactivate an account lightly and this is always the result of a thorough review by our team. Throughout, we keep the customer informed of the process.”

Payoneer was established in 2005 by Israeli engineer Yuval Tal, who remains president of the company. A statement from the company shared with Novara Media implied that its account closures were related to the current situation in Israel and Palestine, though it did not name the territories:

“Payoneer provides its services in compliance with its regulatory obligations and policies and only closes accounts in accordance with our policies as a regulated financial institution.

“During a conflict, there is an elevated risk of terrorism financing and money laundering, so our risk tolerance may change as well as the risk tolerance of our banking partners around the world.

“However, the suggestion that Payoneer is discriminating against any customer is categorically wrong.” A spokesperson for Payoneer added that the company continues to serve 29,507 Palestinians in Gaza.

Experts who spoke to Novara Media suggested there may be more going on...

Online money transfer companies have been particularly slow to allow Palestinians without Israeli or other international citizenships to register since they do not recognise Palestinian ID cards. PayPal has never been launched across Palestine, a policy many human rights groups have described as discriminatory. According to the Palestinian Monetary Authority’s annual annual report, only six foreign lenders operated in the country at the end of 2022.

Nor are Palestinian account closures unprecedented. In 2016, cases emerged of UK charitable organisations linked to Palestinian causes having their accounts closed by high street banks. The UK Co-operative Bank, for example, shut down the account of the Palestinian NGO Friends of Al-Aqsa, without substantive explanation. Within Palestine and Israel, meanwhile, Palestinian NGOs are very accustomed to having their bank accounts and funding shut down, while Palestinian individuals in the territories frequently complain of bank account freezes.

On the reasons for Wise and Payoneers’ account closures, Brightwell suggests that, rather than being personally guilty of any rule breaches, the Palestinian customers who’ve had their accounts closed may have been targeted indiscriminately as their banks scramble to meet their regulatory obligations...

“[During a conflict], banks are under [added] pressure to meet anti-money laundering and counter-terror financing regulations, and have at times attempted to derisk by closing or freezing swathes of accounts they deem high-risk, without sufficient regard to the consequences for those they are debanking,” Brightwell told Novara Media. One banking industry insider, who asked to remain anonymous, put it more starkly.

Financial institutions – particularly smaller, less well-resourced ones such as Wise and Payoneer – are afraid of incurring large fines for inadvertently facilitating transfers to sanctioned organisations or countries, and for good reason. In 2014, BNP Paribas was forced to pay almost $9bn (£7bn) for processing transactions to US-sanctioned states, while in 2018 the Dutch bank ING was fined $900m (£707m) for inadequate money laundering and anti-terror procedures...

Correspondence between banks and customers points to an imprecise assessment process. In online messages between one Palestinian customer and Payoneer’s customer support regarding their account freezing, a Payoneer representative said: “I do not see a payment history that would allow me to understand the reason for your [account freeze]. Sometimes if there is a larger payment that shows an ‘unusual pattern’ it would raise a flag.”

Asked by Novara Media asked what might constitute such a suspicious or “unusual pattern”. Payoneer declined to comment...