Palestinians met requirements for Israel to extend banking waiver, source says

WASHINGTON (Reuters) - Israel's requirements for the indemnification needed to allow Israeli banks to continue conducting transactions with Palestinian banks have been met by the Palestinian authorities, according to a source familiar with the situation.

Technical experts argue that should warrant an extension of a current indemnification - set to lapse on Oct. 31 - for at least a year to avert an economic crisis in the West Bank, the source said.

U.S. Deputy Treasury Secretary Wally Adeyemo, who last month warned Israel that allowing the banking relationships to lapse would put its own security at risk, spoke on Monday with Palestinian Authority Prime Minister Mohammad Mustafa, according to the source. They discussed security and economic issues, as well as the authority's efforts to improve its anti-money-laundering and countering-the-financing-of-terrorism regime.

Adeyemo noted the authority's progress on the issue, including completing key milestones for assessing risks within its jurisdiction and bolstering effective compliance with international standards, the source said.

Israel's embassy in Washington did not immediately respond to a request for comment.

(Reporting by Andrea Shalal in Washington; Editing by Dan Burns and Matthew Lewis)

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