The Treasury Department’s Office of Foreign Assets Control (OFAC) on Jan. 24 removed 17 Israeli individuals, nine Israeli entities, six farms/outposts connected to violent settlers in the occupied West Bank, and one violent Palestinian organization from the agency’s Specially Designated Nationals List (“SDN List”). The action followed President Donald Trump’s executive order on his first day in office revoking President Joe Biden’s Executive Order 14115, issued on Feb. 1, 2024, declaring a national emergency and imposing sanctions related to instability in the West Bank. Trump’s revocation was not a surprise, as his campaign had long signaled such a move and Secretary of State Marco Rubio, during his nomination hearing days before Trump’s inauguration, stated unequivocally the sanctions would be terminated.
On Jan. 29, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) added to the reversal two financial/anti-money-laundering “alerts” it had issued last year under the Biden administration to warn of risks in how extremist settlers raise funds.
In part, the “national emergency” declared by Biden to underly these measures was simply the required step in order for him to impose sanctions pursuant to the International Emergency Economic Powers Act, the principal law used to create most economic sanctions programs. But the foundational reason for the national emergency — “high levels of extremist settler violence, forced displacement of people and villages, and property destruction [that] has reached intolerable levels and constitutes a serious threat to the peace, security, and stability of the West Bank and Gaza, Israel, and the broader Middle East region” — has not disappeared. Trump and his team will need to consider what steps they may need to rely on in the event of an escalation that threatens their overall goals for reducing conflict in the region.
Effect of the Sanctions Reversal
The effect of the actions by Trump and his Treasury Department is to remove U.S. financial sanctions, specifically asset freezes and prohibitions on U.S. persons engaging in most transactions or activities with the identified individuals and entities. The Biden administration also had issued the two FinCEN alerts (here and here) and imposed visa restrictions on those engaged in violence in the West Bank. (By law, the State Department, which oversees visa restrictions, is not allowed to reveal the individuals in vias decisions.) The visa restrictions, which predate the executive order, remain on the books and are not automatically impacted by the termination of E.O. 14115.
In just over 10 months, the Biden administration had imposed eight rounds of sanctions, with designations led by both the State and Treasury Departments, under close oversight of the National Security Council. Although there was a perception that this program only targeted individual settlers with little impact, the sanctions covered nearly three dozen individuals or entities, including several large construction companies and fundraising organizations, most notably the decades-old construction company Amana that is central to establishing many West Bank settlement projects, worth hundreds of millions of dollars collectively. One violent Palestinian entity, Lion’s Den, that was included on the SDN list also had to be de-listed as a result of the Trump administration action, because it was designated under the authority of E.O. 14115.
While those outside the U.S. government do not know how much money may have been frozen or how many transactions have been canceled as a result of the sanctions, as a way of evaluating impact, news media had reported that Israeli banks were taking extra precautions and complying with the sanctions and closing accounts of those targeted. (The Israeli banks themselves were not required to close these accounts because they are not U.S. persons obligated to respect the sanctions; the banks did so to ensure their U.S. banking partners did not consider them too risky by maintaining accounts of sanctioned targets.) The Israeli Knesset was even considering a bill to require banks to re-open accounts. The sanctions resulted in the closure of one organization that had emerged in 2024 for the purpose of disrupting humanitarian aid (that organization has now resumed its activities) and the disruption of fundraising campaigns.
As I wrote here at Just Security in November, the settler movement was infuriated by the sanctions and undertook various campaigns to push back on them, including multiple lawsuits in the United States. Republican members of Congress also voiced their opposition to the sanctions throughout 2024, criticizing the Biden administration as penalizing Israelis more than Palestinians (this overlooked the fact that dozens of Palestinian individuals and organizations are sanctioned under various authorities). Republicans charged that the Biden administration actions were undermining Israel in its fight against Hamas. For their part, a number of prominent Democratic members of Congress, including Senators Dick Durbin, Bernie Sanders, and Chris Van Hollen, echoed the Biden administration’s views. They even introduced legislation to codify the sanctions, which would have prevented Trump from being able to revoke the sanctions through executive order.
The removal of the sanctions now not only will make economic activity with and in support of these previously designated settlers and their organizations easier (though not entirely risk-free, as discussed below), it provides a psychological and rhetorical victory for the movement and its allies, especially in the United States. The litigation against E.O. 14115 also will come to an end as moot.
However, should the situation in the West Bank devolve to a point that the Trump administration decides to act, the visa restriction tool remaining in place provides a basis for action (e.g., announcing that additional settlers will be denied visas should they seek them). Certainly many senior Trump administration officials are supportive of settlement activity, as indicated by these reversals. But it’s possible that the instability and violence in the West Bank might at some stage be more consistently viewed as imperiling the ceasefire in Gaza, whether because of Hamas’ encouragement of violent resistance or a push by right-wing members of Netanyahu’s coalition to take steps toward formal annexation that leads to broader international condemnation and destabilization of the current agreements. At that stage, the administration might conclude that leverage is needed to keep the ceasefire in place and prevent an escalation of conflict. The sanctions program demonstrated that gaining leverage in a manner that captures Israel’s attention is possible in this context. The Trump administration also could rely on more general sanctions programs, such as Global Magnitsky, which applies in cases of human rights abuses and corruption, or counterterrorism sanctions in the case of entities such as Lion’s Den.
A Volatile Situation
Israel began a military operation in Jenin the same day the Trump Treasury Department effected the removal from the SDN list, and the situation in the West Bank remains incredibly volatile. As noted above, there is concern that violence and chaos in the West Bank could risk the ceasefire in Gaza, and that could prompt a review of U.S. leverage points.
But even without such a scenario, banks and other entities will need to continue to monitor transactions involving West Bank settlers and related organizations due to sanctions imposed by other jurisdictions, including the U.K. (three rounds of action in 2024, including against Amana), Canada (multiple rounds of sanctions, including against Amana, and action against the Jewish National Fund), the European Union (using its human rights sanctions program), Australia (also using its human rights program), and Japan (one round of action). Although undoubtedly the U.S. sanctions had the most visibility and leverage with Israeli banks, these sanctions by other countries and blocs remain in place, meaning that filters and databases used by global financial institutions and other entities will continue to raise red flags, requiring additional due diligence and vetting to avoid potential enforcement actions. Should the situation devolve further, it will be important to watch where else these other jurisdictions take their actions — and how else the private sector seeks to shield itself from connection to the violence.
Finally, beyond sanctions, visa restrictions, and other penalties, banks and companies will need to continue to analyze the situation in the West Bank by taking into account the broader United Nations Guiding Principles on Business and Human Rights. Given the tenuous and often violent situation in the West Bank, in some cases involving individuals and entities who were previously sanctioned, as well as the legal situation in light of the International Court of Justice’s 2024 ruling on settlements, declaring them illegal under international law, enhanced due diligence will remain advisable for transactions and activities connected to the territory.
Editor’s note: This piece is part of the Collection: Just Security’s Coverage of the Trump Administration’s Executive Actions