The Israel Prisons Service signed a contract with the Postal Bank allowing the Palestinian Authority to transfer funds to imprisoned terrorists for the purpose of canteen purchases.
The Prisons Service will compensate the Postal Bank if it is sued for violating the law.
According to Yediot Aharonot, the unusual contract was signed following a demand by the Prisons Service that the Postal Bank open accounts serving the terrorists and allowing them to make canteen purchases in prison.
It is expected that the Palestinian Authority will send hundreds of millions of shekels per year through these accounts - despite a law which forbids the transfer of funds from the Palestinian Authority to terrorists imprisoned in Israel.
Attorney Morris Hirsch, head of the legal department at the Mabat Institute for Palestinian Authority communications, said that this situation is not new.
"Almost a year ago, we warned that the Palestinian Authority's deposits to terrorists' accounts are illegal. It's simply inconceivable that the Prisons Service allows itself to ignore the law's guidelines on the battle against terror, in order to protect the 'industrial quiet' in prisons," he said.
The Justice Ministry responded: "Following an in-depth discussion by then-Deputy State Prosecutor for Special Tasks Shai Nitzan, a system was set under which all of the security prisoners' accounts will be under the Prisons Service's name, and it will manage them as a trustee or power of attorney for each and every prisoner."
"Following this, an agreement was signed with the Israel Postal Company, after it was examined and investigated at the time by the relevant sources and approved from a legal perspective. This system is in line with the law's instructions, and there is ongoing supervision of how it is implemented. The Prisons Service can at any time pass to the Postal Bank a list of people who are prevented from depositing money in accounts, and the postal service will be forbidden from receiving deposits from them."