Here's how far reaching the US sanctions on Israeli settlers are - explainer

The US recently signed on a special presidential order against four Israeli settlers involved in violence against Palestinians in the West Bank: Shalom Zicherman, Yinon Levi, David Chai Chasdai, and Einan Tanjile. According to the order, the four were involved in arson that led to harm to human life, threats against Palestinian farmers who abandoned their homes, and physical harm to Palestinians.

The order is considered unusually severe and is mainly given to exclusively to terrorists in times of war or to impede their economic activities. This blacklist, which is signed off on by only top-level US officials, includes the Houthis in Yemen, the Islamic Revolutionary Guard Corps in Iran, Russian oligarch sanctioned during Russia's invasion of Ukraine, and a series of senior terrorists that the US designated to cut off their funding.

Cancellation of the order can be done through a directive from the US president, for example – then-president Donald Trump initiated the order on the Houthis, and President Joe Biden himself signed the order to remove it (and then returned it later).

Meanwhile, the bank accounts of the four settlers are being blocked – Leumi Bank has already blocked the first account belonging to Yinon Levi, Bank Hapoalim is in the process of blocking the two accounts of Shalom Zicherman and Einan Tanjile, and the Israel Post has also blocked the account of the fourth settler, David Chai Chasdai.

Some right-wing ministers have called to defend them. Finance Minister Bezalel Smotrich sharply criticized the decision and said, "If the price is the imposition of American sanctions on me – then so be it."

Communication Minister Shlomo Karhi said that he will examine whether he has the authority to order the removal of the blockade: "Blocking a citizen's Israel Post bank account due to a controversial order from the US is unacceptable. Such a crackdown on an Israeli citizen without any proper legal proceedings should not be allowed.

"I have transferred the issue for legal examination," Karhi continued.

The true severity of the US sanctions against Israeli settlers

But it is not just about blocking a bank account or preventing entry into the United States as reported initially, the significance of the order is blocking access of those same four settlers from any financial activity related to the United States in any way. And according to Prof. Asher Blass, former chief economist at the Bank of Israel, this is much broader than one would initially think: "Almost everything financial utilizes the global banking system. Almost every company today, including Netflix, Apple, and others, rely on services and are in some way or another in the United States. It starts with banks and the financial system but also blocks access to SWIFT (the global money transfer system used by companies from over 200 countries – Israel included). These sanctions have also been levied against them."

According to Blass, regarding those subject to sanctions and the options available to them, "Not complying with the sanctions can cause damage to the Israeli public as a whole."

Blass adds that "if the situation was that these four people were being tried, this would not happen. It only happens when local authorities do not act. It is quite exceptional when it is activated by a treaty and a country with a functioning judicial system."

Since Thursday evening, it seems that the financial bodies holding accounts in Israel have begun to act in accordance with the order.

It appears that they have a good reason – according to the order, if official entities in Israel do not comply with the sanctions order, it could be interpreted as support for those offenders and complicate Israeli financial systems trying to operate under the shadow of war.

The Bank of Israel, which stands alongside Bank Leumi, explained the implications in an official response: "An evasion of sanctions, as stated, has within it the potential to expose the banks to significant risks, including compliance risks, money laundering risks, and financing terrorism risks, and legal risks."

This was also the case with Israeli financial bodies in the past, when the US imposed significant penalties and restrictions on Israeli banks following money laundering accusations: "Concerns arose against the financial activities of Israeli banks following money laundering allegations, and three Israeli banks were included in the [not very large] list of banks in the world that are worth thinking twice before dealing with them," explained Prof. Blass.