Israeli Finance Minister Smotrich, under pressure from U.S. Treasury Secretary Janet Yellen, will sign a waiver to extend cooperation between Israeli and Palestinian banks for another month after the cabinet agreed, his spokesman said on Thursday.

Smotrich in June extended a waiver that allows cooperation between Israel's banking system and Palestinian banks in the West Bank, but only for four months until the end of October.

The waiver allows Israeli banks to process shekel payments for services and salaries tied to the Palestinian Authority without the risk of being charged with money laundering and funding terrorism. Without it, Palestinian banks would be cut off from the Israeli financial system.