Israel’s banking regulator has apparently discovered U.S./EU sanctions of Russia according to an Israeli online business portal Globes. Though sanctions related to Russia’s activity in Ukraine have been in place for over a year, for the first time Bank of Israel has ordered Israeli banks to establish policies and procedures for dealing with Russia entities in light of the sanctions. According to the letter:

“Since it is possible that the sanctions will also apply to other banks and financial institutions, you are hereby required to keep informed, and obtain legal advice about it,”

Israeli banks are also required to

“scan their credit portfolio in order to check whether they are working with parties subject to sanctions… establish rules for identifying and avoiding new transactions with parties subject to sanctions, and to define work procedures vis-a-vis the relevant parties.”

Bank of Israel also stated that Israeli banks are authorized to refuse to service or discontinue existing agreements with sanctioned parties under Israeli banking law.

It’s wholly unsurprising that a foreign regulator would instruct banks within its jurisdiction to consider the impact of foreign sanctions on their operations.

What is curious about this particular case is the timing and the involvement of political actors. According to Globes,

“Bank of Israel contacted the banks on this question only several weeks ago, apparently after it was discussed at various political echelons (emphasis added)”

Since the Ukraine conflict began, Israel has refused to supply the Ukrainian government with arms at the request of Russia. Apparently Israel also failed to order its financial institutions to comply with U.S./EU sanctions.

A few weeks ago, Russia announced that it would be supply Iran with the advanced S-300 anti-aircraft platform. Miraculously, sanctions compliance has now become a priority for Bank of Israel after internal “political discussions.”

Interesting timing…