Following the swearing in of the Hamas government last week, Bank Hapoalim is cutting its financial ties with Palestinian banks to avoid possible violations of law given Hamas's status as a terrorist organization. "In agreement with the Bank of Israel and after the bank examined the international law directives, particularly in light of the events that have occurred, it was decided not to continue the connection with Palestinian banks," Bank Hapoalim said. "This decision will take place according to the schedule required by agreements to which the bank is bound." Hamas is recognized as a terrorist group by the US, Israel and European Union. Bank Discount said that given the Hamas rise to power it, too, was reconsidering its ties with the Palestinian banks. "In the meantime, the bank is still providing very specific services to a very limited number of Palestinian banks," said a Bank Discount spokesperson, who noted that the bank reports all of its activities with Palestinian banks to the Bank of Israel and the Israeli government. Bank Hapoalim and Bank Discount were the two main banks and just about the only Israeli banks to keep financial transactions with the Palestinian Authority since the Paris Accords in the 1990s, which determined the two banks as the correspondence banks to Palestinian banks. As a result of a new Israeli anti-terrorism law, which prohibits business with organizations that are classified as terrorist organizations, Bank Hapoalim has decided to cease any related operations. "It seems that in light of international and Israeli anti-terrorism laws and recent money laundering cases, Bank Hapoalim decided to seize their operations to avoid being faced with the threat of prosecution," said a representative of the Bank of Israel. Recently, US banks also were instructed to cut their ties with the PA after the Hamas government took control. According to the new Palestinian Anti-Terrorism Act of 2006, "The President should direct the United States Executive Director at each international financial institution to use the voice, vote and influence of the United States to prohibit assistance to the Palestinian Authority." If banks don't comply, they can face criminal charges or civil penalties. In February, the Israeli government stopped transferring about $50 million in tax payments a month collected on behalf of the Palestinian National Authority following the Hamas election victory.