FinCEN Issues Alert to Counter Financing to Hamas and its Terrorist Activities

The U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) issued an alert on October 20, 2023, aimed at assisting financial institutions in identifying funding streams that support the terrorist organization Hamas. This move comes after a devastating attack on Israel on October 7, 2023, orchestrated by Hamas, which resulted in significant casualties, including U.S. citizens.

Hamas employs a multifaceted approach to raise funds for its operations. According to the U.S. Department of the Treasury, the organization receives support from Iran, estimated at times to be as high as $300 million per year. Additionally, Hamas utilizes private donations, a global portfolio of investments, and diverts aid from legitimate charities. They also control border crossings and avenues of commerce, engage in racketeering, and run extortionary practices around local populations. Notably, Hamas has been involved in fundraising campaigns that use both fiat and virtual currencies.

FinCEN has outlined specific red flag indicators to help financial institutions detect, prevent, and report potential suspicious activity related to Hamas's terrorist financing. These indicators include transactions with OFAC-designated entities, transactions indicating support for terrorist campaigns, and transactions involving high-risk jurisdictions tied to Hamas activity. Financial institutions are urged to include the key term "FIN-2023-TFHAMAS" in Suspicious Activity Reports (SAR) to indicate a connection with the alert.

As part of a whole-of-government response, the Treasury is engaging with foreign counterparts to deny Hamas the ability to raise and use funds worldwide. Numerous Hamas members and financial facilitators have been designated by the Office of Foreign Assets Control (OFAC) in various countries, including Sudan, Türkiye, Algeria, and Qatar.

FinCEN has also expressed concerns over the use of virtual currencies and online platforms in financing terrorist activities. The alert specifically mentions that Hamas has been involved in fundraising campaigns involving virtual currency and fictitious charities. Financial institutions are advised to be vigilant in monitoring transactions that involve virtual currencies, especially those that originate from or are directed to high-risk jurisdictions.

Given the evolving nature of terrorist financing methods, FinCEN is continuously updating its guidelines and working closely with international partners to curb the flow of funds to terrorist organizations. Financial institutions are advised to stay updated on FinCEN's alerts and guidelines to ensure compliance and contribute to national security efforts.