Important news for PayPal users in Palestine!

Important News for PayPal Users in Palestine

New rules will require Israeli IDs and facial recognition scans to use PayPal in Palestine

Israel is requiring all payment providers to use new rules for anyone with their account country set to "Israel" that will affect their ability to use all payment services starting in a couple of months. A new directive, ostensibly "to prevent terrorism and money laundering", was passed requiring payment processors and all companies facilitating financial transactions to REQUIRE PROOF OF AN ISRAELI ID for the majority of transactions and BAN USERS that can't provide one, as part of the new KYC ("know your customer") requirements.

This update will affect all companies that facilitate sending or receiving money to/from "Israel" that don't have an option to choose "Palestine" when creating an account, such as PayPal, where Palestinians in East Jerusalem, the West Bank, and Gaza are forced to create accounts by setting their country to "Israel".

These requirements are rolling out to payment providers in 2026 as they come into compliance with the new regulations (for PayPal, we expect these new requirements to begin sometime around June).

What's new

This new law will force payment providers to require users to upload a valid Israeli ID (or provide a foreign passport) for anyone that selects "Israel" as their country of residence when using payment services in the following cases:

If any of these happen, the account will be automatically frozen by a new automated compliance system and the user will have to provide official Israeli documents that prove their ID and address. According to the compliance documents released by the Israeli government in late 2025, users will have to provide the following:

Additionally, if an account holder

they will be required to undergo a second round of verification where they'll be required to additionally provide the following:

If verification is not completed within 14 days of the account being flagged for compliance, the transaction will be declined and the account holder will be blocked from any future transactions on the account, including withdrawing money in the account.

The list of "high risk" countries

Transactions to or from the following fourteen countries will trigger the automated suspension and verification process described above:

Affected individuals

Anyone with an account with a bank or a company facilitating the transfer of money with their country of residence set to "Israel" will be subject to these new rules. If a bank or financial services provider lets users choose "Palestine" as their country of residence, they are subject to other rules, but any Palestinians, even those residing in East Jerusalem, the West Bank, and Gaza with "Israel" as their country of residence for services like PayPal and others that do not offer a "Palestine" option will be subject to the rules above.

You can check if your account will be subject to these new rules by logging in and checking your profile settings. In PayPal, after logging in click the gear in the top right to see to your profile settings, and look for “Account Options,” then the account country will be indicated as “Nationality.” This screen also shows the address, phone number, and other information associated with your account. Note that while address, phone number, and email can all be updated, the country of a PayPal account cannot be changed without creating a new account.

What about Palestinian citizens?

This law and the new requirements and regulations apply equally to citizens of Israel and Palestinian citizens residing in occupied Palestine, both in East Jerusalem as well as in the West Bank and Gaza.

The new regulations and directives by the Israel Securities Authority specify that identification cards (hawiyya/هوية) issued to Palestinians residing in Occupied Palestine by the Israeli authorities are considered to be acceptable forms of ID for the purposes of this law, it remains to be seen whether or not they will be accepted by the third-party identity verification providers that will be responsible for determining the identity of users of these financial service providers.

Until we receive confirmation from users that have undergone identity verification (probably sometime around July or August of 2026), it is best to act under the assumption that these IDs will not be accepted to be on the safe side, as there are no second chances with this new directive and you will be permanently locked out of your account without access to your money if you are unable to prove your identity to the satisfaction of the identity provider within 14 days of your account being flagged for KYC.

Palestinian passports will not be considered acceptable forms of ID!

How can users prepare?

If your account's country of residence is set to "Israel", look at the list of documents above and determine how many you can provide. The name on the ID document MUST match the name on your account, and the ID photograph MUST match the face scan you provide. The address, phone number, and other information on the ID document may also be checked with your PayPal account information. You cannot perform a face scan against a printed out picture or a computer/phone screen; the facial recognition scans perform what is known as a "liveness check" to verify you are scanning the face of a real, live human being.

If you do not think you'll be able to provide the required documents to pass the compliance check:

If you do choose to go through the KYC process, make sure you have (originals of) all the documents you'll need to provide and a phone with a working front-facing "selfie" cam before starting the process, and make sure you have read the section below this one on the dangers and risks of compliance. We strongly advise using a temporary phone to perform the identification process, if at all possible.

Dangers and risks of compliance

Even users able to provide the required proof of identity should ideally avoid triggering the automated compliance checks if at all possible.

Israel is requiring that all financial service providers and identity verification companies collect and store the following data/documents indefinitely and make it available to Israeli authorities directly/immediately on demand:

Identity verification is normally not carried out by the financial services provider themselves; usually this is outsourced to specialized firms like the Israeli AU10TIX (founded by IDF Unit 8200 members and staffed by Shin Bet and IDF veterans). Aside from being required to share all your info with the Israeli government/military, these identity verification firms often have poor security themselves and have been hacked as well as being known to leak insecurely stored data.

If you have the option of using a temporary or burner phone to carry out the identification process, that is probably a good idea. While you can use public wi-fi to avoid revealing your phone details, we do not recommend using a VPN as that will probably result in verification failure and flag your account for further scrutiny.

Affected service providers

We expect the biggest impact to be on Palestinian PayPal users. Users of Airwallex, Mesh, Payoneer, Rapyd, Remitly, Revolut, and Wise (among others) are also subject to the same compliance rules.

Chuffed, GiveButter, GoFundMe, LaunchGood, and Zeffy DO NOT operate in Israel and are not subject to Israeli compliance and KYC regulations. If, however, you use PayPal to receive funds collected from a crowdfunding/mutual aid campaign run in another country, you will need to be careful of the compliance regulations indicated above and should work with your Western campaign sponsor to make sure that you are ideally receiving the funds in small chunks as they come in rather than all at once.

Traditional bank payments are not affected by these changes as they already comply with international KYC rules for fighting fraud and money laundering. We strongly advise using SWIFT or wire transfers to receive funds if at all possible and where liquidity allows.

Whether or not cryptocurrency providers are affected will depend on the details and extent of the money transferring services they offer. If you are using Binance, make sure you have your country of residence set to Palestine to avoid falling afoul of these new requirements/regulations.

Legal details

These new requirements and regulations are parts of financial regulations passed by Israel after October 7th in an attempt to clamp down on the flow of money into the occupied territories. The new regulation, the Prohibition of Money Laundering (Identification, Reporting and Recordkeeping Duties of Payment Companies for the Prevention of Money Laundering and Terror Financing) Order, was passed in 2024 following the Regulation of Payment Services and Payment Initiation Law in 2023. These rules direct the Israel Securities Authority (ISA) to license and regulate non-bank payment providers operating in Israel, most importantly, PayPal.

You can refer to these articles for an explanation and overview of these compliance regulations.

We've also obtained a copy of the official Israeli directives and are hosting them (along with a machine translation into English) for your convenience: