An Israeli man receiving controversial terror stipends from the Palestinian Authority was among nine people arrested as police and tax authorities busted a money-laundering network on Tuesday.

Nine suspects from Nazareth and Wadi Ara were arrested in a joint operation of the Israeli Tax Authority, the National Headquarters for Combating Terrorism, and the Israeli Police.

Authorities dismantled a network of companies that distributed and offset fictitious invoices amounting to tens of millions of shekels for money-laundering and tax offenses. Police seized luxury vehicles and tens of thousands of shekels worth of Israeli and foreign currency.

The Tax Authority said that a company allegedly providing personnel services to nursing companies deducted in its fictitious tax invoices tens of millions of shekels by using invoices distributed by shell companies which do not provide any business services.

The investigation began when the Tax Authority learned that an Israeli citizen had purchased a Mercedes vehicle worth more than 350,000 shekels ($94,000) with money received from the Palestinian Authority terror stipends. The Tax Authority said the suspect was related to two Israeli citizens who were convicted of murdering an Israeli soldier.

Ramallah pays stipends to imprisoned Palestinian terrorists and to the families of dead terrorists. Israeli officials say the payouts provide incentives for terror and regularly offsets an equivalent amount from taxes that Israel collects on behalf of the Palestinian Authority.

In February, the Knesset passed a law that would allow the Interior Ministry to revoke the citizenship of Israeli nationals receiving such “pay for slay” stipends. Violators could potentially be deported to other countries or the Palestinian Authority.

The vast majority of payments go to Palestinians living under PA jurisdiction. It’s not clear how many Israeli nationals are receiving the payouts.

The Palestinian Authority is legally mandated to allocate seven percent of its annual budget for its so-called “Martyr’s Fund,” which provides stipends to Palestinian terrorists in Israeli prisons, and the families of terrorists killed in attacks. The size of the monthly payouts depends on various factors such as how many Israelis were killed, how long the terrorist has been incarcerated and family size.

Ramallah has been paying out stipends for years, but the issue came under a spotlight following the murder of Taylor Force, a U.S. citizen killed by a Palestinian who went on a stabbing rampage in Jaffa in 2018. Congress passed the Taylor Force Act, which halted U.S. aid to the Palestinians as long as terror stipends are being paid out.

U.S. assistance to the Palestinian Authority resumed under the administration of President Joe Biden. In December 2022, American victims of Palestinian terror filed a lawsuit against the President and Secretary of State Antony Blinken, arguing that the payments violate the Taylor Force Act.