WASHINGTON: Trump administration officials have held advanced discussions on hitting UN Palestinian refugee agency UNRWA with terrorism-related sanctions, said two sources with direct knowledge of the matter, prompting serious legal and humanitarian concerns inside the State Department.

The United Nations agency operates in Gaza, the West Bank, Lebanon, Jordan and Syria, providing aid, schooling, health care, social services and shelter to millions of Palestinians.

Top UN officials and the UN Security Council have described UNRWA as the backbone of the aid response in Gaza, where the two-year war between Israel and Palestinian militant group Hamas unleashed a humanitarian catastrophe.

The Trump administration, however, has accused the agency of links with Hamas, allegations UNRWA has vigorously disputed.

Washington was long UNRWA’s biggest donor, but halted funding in January 2024 after Israel accused about a dozen UNRWA staff of taking part in the deadly Oct. 7, 2023, Hamas attack that triggered the war in Gaza. US Secretary of State Marco Rubio then accused the agency in October this year of becoming “a subsidiary of Hamas,” which the US designated as a terrorist organization in 1997. It was not immediately clear if current US discussions were focused on sanctioning the entire agency — or just specific UNRWA officials or parts of its operation, and US officials do not appear to have settled on the precise type of sanctions they would deploy against UNRWA.