FIFA fined the Israeli Football Association (IFA) 150 000 Swiss francs ($190 700) on Thursday for "multiple breaches" of its anti-discrimination obligations.
A report by the disciplinary committee of world football's governing body found the IFA "failed to take meaningful action" against the club Beitar Jerusalem for "persistent and well-documented racist behaviour".
In October 2024, the Palestine Football Association reported allegations of discrimination by the IFA to FIFA, which began an investigation.
FIFA did not opt for the sanction requested by the Palestinian FA, which argued that the IFA should be suspended.
But the IFA was found to have failed to "abide by FIFA's statutory objectives", in a decision published by its disciplinary committee, which listed several racist incidents in Israeli football.
The disciplinary committee highlighted "deficient and substantively inadequate" sanctions against Beitar for racist and discriminatory behaviour.
Supporters of the club "have engaged in persistent and well-documented racist behaviour," the report said.
"The club's use of slogans such as 'forever pure', and the repeated chanting of ethnic slurs such as 'terrorist' directed at Arab players are not isolated incidents but rather form part of a systemic pattern of conduct that offends the basic rules of decent behaviour and brings the sport into disrepute."
FIFA said the committee had stressed that Beitar Jerusalem were "only a small example of a general failure by the IFA."
The IFA was issued with a warning and was ordered to display a banner at its next three FIFA competition home matches, stating "Football Unites the World – No to Discrimination".
The IFA will also have to invest one-third of the fine towards implementing a plan to "ensure action against discrimination and to prevent repeated incidents".
The report also said that the IFA's failure to respond to "political and militaristic messaging" by the CEO of the Israeli professional league and by Maccabi Netanya "further compounds its breach".
"The IFA has made no public statements condemning racism, has not launched any Anti Discrimination campaigns, and has not taken steps to foster inclusion of Arab or Palestinian players," the report continued.
"It has not used its platform to promote peace or to counteract the politicisation of football by affiliated clubs and officials."
The IFA responded to the punishment on Friday claiming it did tackle racism but "most of the measures were not publicised".
"Well before the fine for racism, the Federation and the clubs were already working, and will work with a growing intensity against this repugnant scourge."
'NO ACTION' OVER ISRAELI TEAMS IN WEST BANK
After a separate investigation, FIFA said it could not rule on whether Israeli clubs based in the occupied West Bank could take part in the Israeli league.
FIFA's governance, audit and compliance committee based its judgement on the fact that "the final legal status of the West Bank remains an unresolved and highly complex matter under public international law".
The Palestinian Football Association (PFA) welcomed FIFA's ruling, saying "it was a step in the right direction".
However it added: "The PFA observes that the findings do not fully address the scope and gravity of the violations raised in its original proposal."
In 2024, United Nations experts – mandated by the Human Rights Council but not speaking on behalf of the UN – said at least eight football clubs had been identified as playing in "Israeli colonial settlements" and called on FIFA to "fulfil its responsibility to respect human rights".
"The autonomy and self-regulation in sport must not be detrimental to fundamental human rights," the experts said.
In addition to roughly three million Palestinians, more than 500 000 Israelis live in settlements and outposts in the West Bank, which are illegal under international law.