West Bank Country Summary

FATF Status

The West Bank/Gaza Strip is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

A Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards has not yet been undertaken for the West Bank/Gaza Strip.

A September 2022 poll indicates that the Palestinian public perceives favoritism and nepotism as the primary forms of corruption, particularly within government institutions. While the Anti-Graft Law of 2005 aims to combat corruption, the belief that access to power is essential for business success remains prevalent. Despite low reported instances of bribery, civil society and organizations like the Coalition for Integrity and Accountability actively promote anti-corruption efforts.

The Palestinian economy in the West Bank is characterized by a nominal GDP of just over $19 billion as of 2022, but it has faced significant challenges, particularly following the events of October 7, 2023, which led to a sharp economic downturn and increased restrictions on movement and access. The economy is heavily reliant on trade with Israel, with approximately 90% of exports directed there, resulting in a substantial trade deficit of $6.2 billion in 2023. Despite a well-educated labor force, high unemployment rates persist, particularly in Gaza, where the unemployment rate reached 74% in the fourth quarter of 2023.

The investment climate in the West Bank is significantly hindered by ongoing Israeli restrictions on movement and access, which have intensified following the events of October 7, 2023, leading to a sharp economic downturn. Despite a well-educated labor force and some sectors showing potential for growth, such as information technology and agriculture, foreign direct investment remains low at around 1% of GDP, largely due to political and economic uncertainties. The Palestinian Authority has made efforts to improve the business environment through legislative reforms, including a new Companies Law that facilitates foreign investment, but challenges persist in the form of high transaction costs and limited market access.