U.S. Watchdog Issues Terror Finance Alert as Treasury Wages Sanctions Onslaught on Hamas

In wake of the ongoing turmoil developing abroad, the United States government officially enacted its intervention strategy against the radical Hamas militant organization. While the U.S. Treasury Department and many of its counterparts already had long-standing sanctions in place barring the extremist group from the international banking system, the group was discovered to have been abusing cryptocurrency markets around the world as a means of both raising funds and subsequently laundering tens of millions of dollars’ worth of criminal proceeds to allow their destabilizing activities to proliferate. Of course, these efforts were also facilitated by numerous third parties found both within the Middle East and further abroad. With the identities of these entities now coming to light amid a growing global spotlight on these recent developments, the U.S. has begun to widely expand their existing sanctions to include external facilitators and financiers in hopes of slowing the group’s financial flows.

Last Tuesday, the Treasury’s Office of Foreign Assets Control (OFAC) levied stringent economic sanctions against a total of ten individuals and entities they identified as “key Hamas terrorist group members, operatives, and financial facilitators” located in Gaza and across Sudan, Turkey, Algeria and other jurisdictions. Among the persons affected by the new sanctions are the alleged financial managers of a once-secret investment portfolio estimated to be worth upwards of $500 million and viewed as the primary source of funds for the terror group’s activities, as well as a Qatar-based financial facilitator that has known ties to the Iranian government, a Hamas military commander, and a Gaza-based cryptocurrency exchange and its primary operator.¹ The sanctions of the individuals involved who are located in Qatar and Turkey are particularly unsettling in that the countries are widely viewed as U.S. allies with respect to foreign intelligence and security initiatives, leading many to wonder what else could have slipped through the cracks leading to this point.

Representatives for OFAC speaking on behalf of the U.S. government issued strong statements backing the actions they are currently taking against Hamas. Treasury Secretary Janet Yellen said the U.S. “is taking swift and decisive action to target Hamas’s financiers and facilitators following its brutal and unconscionable massacre of Israeli civilians, including children.”¹ Secretary of State Antony Blinken took things a step further by threatening the Hamas and calling for the release of all hostages being held by the group. “Hamas alone is responsible for the carnage its militants have inflicted on the people of Israel, and it should immediately release all hostages in its custody,” Blinken said. “The United States will not relent in using all the tools at our disposal to disrupt Hamas terrorist activity.”² With their most recent moves, the Treasury has now cumulatively targeted roughly 1,000 individuals and entities connected to terrorism and terrorist financing by the Iranian regime and its proxies, including Hamas, Hizballah, and other Iran-aligned terrorist groups in the region over the past several decades.¹

U.S. sanctions are widely viewed as one of the most effective means of disrupting global terror financing initiatives, with these efforts often setting the bar for additional enforcement actions to be taken on behalf of their international counterparts. Given the hostile state of affairs in this region however, many have questioned whether the proposed restrictions brought forth by last week’s actions will actually be followed by financial institutions in the Middle East – thus rendering them less effective. Many Middle-Eastern countries are sympathetic to the plight of the Palestinians and have sided with the Hamas both openly and internally, with this standing further backed by the group’s perception as a legitimate political organization by many in the region. That being said however, it is expected for banks in the region to widely fall in line when it comes to compliance with the novel sanctions, as the risk of being cut off from the U.S. and European financial markets would be devastating to most any bank, regardless of the region of incorporation.

               Nevertheless, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a special counter-terrorism financing alert last Friday, warning domestic financial institutions – including banks, money-transfer businesses, cryptocurrency platforms and even casinos – to be vigilant of any possible funding streams to the terror organization in the weeks to come. FinCEN also wants these firms actively looking out for red flags and suspicious activity involving Middle Eastern entities, shell companies being used to launder funds on their behalf, and operations posing as charitable or humanitarian fundraising bodies seeking donations. More specifically, FinCEN warns of the transfer of funds from entities of this variety to parties based in the Middle East. Should activity of this nature be identified, they have urged the appropriate parties to disclose it to them in a timely manner for these actions to be mitigated.

FinCEN’s October 20^th alert can be read in its entirety here.

Citations

1. “Following Terrorist Attack on Israel, Treasury Sanctions Hamas Operatives and Financial Facilitators.” U.S. Department of the Treasury, 18 Oct. 2023.
2. Hussein, Fatima. “The US Sanctions 10 Hamas Members and Its Financial Network over the Surprise Israel Attack.” AP News, 18 Oct. 2023.