US claims PA’s prisoner payments reform a con, dismissing audit that suggests otherwise

Jacob Magid is The Times of Israel's US bureau chief

The US State Department on Sunday accused the Palestinian Authority of trying to “dupe” the international community into believing it ended a welfare system that incentivized attacks on Israelis, dismissing an external audit that suggested otherwise.

PA President Mahmoud Abbas signed a decree in February 2025 ending the previous program, which conditioned payments to Palestinian security prisoners on the length of their sentence, and established a new system that tied all welfare stipends to recipients’ financial situation.

Initial skepticism in Washington over the announcement intensified when it was discovered the following November that a subsequent round of payments was made under the previous mechanism. Abbas fired his finance minister over the transgression, but Ramallah has failed to earn the Trump administration’s trust on the issue.

In an attempt to demonstrate its seriousness, the PA commissioned the prominent global consulting firm Alvarez & Marsal to conduct an audit of its new welfare system being run out of the Palestinian National Economic Empowerment Institution (PNEEI or “Tamkeen” in Arabic).

Earlier this month, the PA announced that the audit had confirmed that the reform of its welfare program is being properly implemented.

The US responded by calling on the PA to publicly release the audit. Last week, Ramallah released A&M’s summary of the audit, which confirmed Ramallah’s own description of the results.

The audit identified the batch of illicit payments under the previous system that was made in November 2025, but noted that the PA had informed A&M that those were for previously accrued obligations before the February 2025 reform was announced. The audit said additional documentation was still needed to independently verify that the old payment mechanisms have been permanently shut down.

Overall, though, the auditors concluded that the reform has largely succeeded in separating the new cash assistance program from the previous prisoner payment system, while recommending stronger documentation, automation and financial controls to ensure the separation remains permanent.

Asked for comment on the matter, a State Department spokesperson again offered a dismissive response.

“The review commissioned by the PA examined only the new social payments institution (“Tamkeen”) without looking into the various clandestine bypass channels that the PA built around it, under the international community’s radar,” the spokesperson said in a statement to The Times of Israel.

“This review alone cannot serve as any proof that ‘pay-for-slay’ payments have stopped. It did not receive, nor examine, any evidence on the continuing payments to terrorists and their families, which are disguised as fake wages and pensions or simply handed in cash,” the State Department spokesperson said, suggesting that those are the methods that the PA is now using to pay the families of prisoners and slain attackers, albeit without providing evidence.

The Israeli government has made similar accusations.

“The PA is trying to mislead the international community that it met its commitment to end ‘pay-for-slay’ by presenting the A&M review as proof. The fact that the PA has not published the full review should be enough to raise suspicion that such disclosure would expose its deceit,” the statement continued. A source familiar with the matter said the remainder of the audit is largely technical, but said the PA has handed over the document in its entirety to the Trump administration.

“The EU and other international donors must not be duped by this deception. Reviews and accounting audits will not uncover the full scope of the PA’s new terror-payments scheme which, like sophisticated large-scale money-laundering operations, is designed specifically to evade such scrutiny,” the State Department spokesperson claimed.

“The onus should be on the PA to prove that it ended ‘pay-for-slay’ in a genuine and irreversible manner,” the spokesperson continued. “The PA’s tricks and manipulations are obvious and will not succeed. The PA must end all forms of encouragement, glorification and rewards for terrorism.”

The PA hoped that a “kosher” stamp from a respected independent company would certify a reform of its welfare program that has long been demanded by the international community.

Ramallah believed the audit’s positive results would be enough to convince the US to conduct a similar review of the program so that Washington can deem Ramallah to be in compliance with congressional legislation that bars aid to the PA so long as payments to prisoners based on the length of their sentence continue.

That law — the Taylor Force Act — requires the US secretary of state to update Congress every 180 days on whether the PA has ceased the old controversial welfare scheme. The last report to Congress determined that it was still in place, but it relied exclusively on open-source information from the Israeli government and several organizations that have long been critical of the PA.

Meanwhile, Israeli officials have been working to discredit PA assertions that the payments to the families of prisoners have ended, with a European diplomat telling The Times of Israel that Israeli counterparts are requesting meetings to make the case against the veracity of Ramallah’s reform.

Pay-for-slay is still official Palestinian Authority policy.

As Euractiv reports, “It is not a phasing-out of the pay-for-slay policy. Rather, the money has gone underground through a systematic effort to make these channels covert and clandestine."

— Israel Foreign Ministry (@IsraelMFA) July 9, 2026

An Israeli official told The Times of Israel that the A&M audit is not to be taken seriously because only intelligence agencies would be able to detect the payments that are continuing under the table.

The official said the PA is also continuing the policy of rewarding prisoners by giving jobs to some of those who have been released by Israel.

A Palestinian official argued that Israel’s campaign against the PA reform is part of a broader effort to delegitimize Ramallah and bring about its collapse.

Jerusalem is currently blocking the transfer of billions of dollars in Palestinian clearance revenues, which make up the bulk of the PA’s budget and have left Ramallah unable to pay the salaries of more than 150,000 government employees.

Finance Minister Bezalel Smotrich has also taken steps to severely hobble the Palestinian banking sector, which, as a result, has been unable to make use of billions of shekels that are languishing in vaults in the West Bank.

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