- FinCEN has urged crypto-service providers to be vigilant in recognizing and reporting suspicious transactions
- This includes clients who have engaged in transactions with businesses located in jurisdictions associated with Hamas
The Financial Crimes Enforcement Network (FinCEN) issued an alert on 20 October, aimed at several financial institutions. The goal being to identify “suspicious activity” related to funding terrorist groups. The alert specifically highlighted the militant group Hamas, which was responsible for an attack on Israel on 7 October.
According to the notice, Hamas has been undertaking “fundraising campaigns involving virtual currency and fictitious charities raising both fiat and virtual currency” to finance its activities. In response to this, FinCEN urged virtual asset service providers and other financial institutions to be vigilant. FinCEN has urged them to recognize and report any suspicious transactions that may have links to Hamas.
The alert specified several red flags for financial institutions to be cautious of. This includes clients who have engaged in transactions with businesses located in jurisdictions associated with Hamas, and entities that are already on the Office of Foreign Assets Control’s list of Specially Designated Nationals. Finally, those that solicit cryptocurrency donations through social media channels are also being watched.
This warning came shortly after FinCEN proposed designating crypto-mixing services as a primary area of concern related to money laundering activities associated with terrorism.
U.S lawmakers and officials target crypto after latest episode
Meanwhile, U.S Senators Elizabeth Warren, Roger Marshall, and Representative Sean Casten have intensified their efforts to combat “crypto-financed terrorism.” This follows reports that Hamas used crypto to raise funds. Over 100 lawmakers have written to senior Biden administration officials. They’ve requested an explanation of their strategy to address the use of cryptocurrencies in terrorism financing.
In fact, a Wall Street Journal report alleged that Hamas and Palestinian Islamic Jihad (PIJ) had received up to $134 million in cryptocurrencies since 2021. This was based on data from forensic firm Elliptic and Tel Aviv software company BitOK.
The lawmakers urged the administration to take robust action to mitigate the risks associated with illicit crypto-activities. In response to these concerns, the U.S Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on a Gaza-based virtual currency exchange and other Hamas operatives.
Hamas first ventured into cryptocurrency fundraising in February 2019 to evade international sanctions. Israeli authorities collaborated with global crypto-exchange Binance [BNB] to freeze accounts allegedly linked to Hamas. More than 100 accounts on Binance have been reportedly closed since Hamas’s attack.
It’s worth noting this is not the first time FinCEN has issued such a warning. Back in March 2022, ir issued a similar alert to financial institutions concerning Russian entities attempting to evade sanctions using cryptocurrencies during the invasion of Ukraine.