Guide to Assist Financial Institutions in Identifying Funding Streams Supporting Hamas

As an organization officially designated as a terrorist group, Hamas’s operational capabilities are significantly sustained through a complex web of financial support, which often occurs through money laundering. Understanding the nuances of these funding streams and the methodologies employed is critical for institutions that form the bulwark against such illicit financial flows.

This short guide is intended to serve as a critical resource for financial professionals, compliance officers, and regulatory bodies in their ongoing efforts to stifle the channels that fund terror activities. It encapsulates a thorough analysis by the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), detailing the alert on the role of financial institutions in identifying and reporting the financial underpinnings of Hamas.

On October 7, 2023, a devastating terrorist attack, attributed to Hamas, targeted innocent civilians in Israel, impacting not just Israelis but citizens of the United States and other nations. This attack underlines the importance of cutting off the funding channels that enable such acts of terrorism. Hamas adopts various funding mechanisms, including:

• Support from nations like Iran
• Private donations
• Global investments
• Diverting resources from legitimate charities
• Controlling commercial avenues and border crossings
• Adopting racketeering frameworks
• Extorting local populations
• Launching virtual and fiat currency fundraising campaigns through bogus charities

Furthermore, the movement of these funds often involves smuggling physical currency, money transmitters, exchange houses, and banks affiliated with Hizballah.

To detect, prevent, and report potential suspicious activities tied to Hamas’s financing, financial institutions should be attentive to the following indicators:

• Transactions with OFAC-designated entities: Transactions that involve entities, individuals, or identifiers (like email, physical address, phone number, passport number, or virtual currency addresses) that are designated by OFAC.
• Support for Terrorist Campaigns: Transactions containing information that indicates support for terrorist campaigns.
• Transactions with Risky MSBs: Engaging with Money Services Businesses or financial institutions, especially those dealing with virtual currencies in higher-risk jurisdictions linked to Hamas. Particularly if they are suspected of having weak customer due diligence or non-compliance with AML/CFT best practices.
• Connections to Iran or Affiliated Groups: Transactions that involve entities with links to Iran or Iran-supported terrorist groups like Hizballah and Palestinian Islamic Jihad.
• Charitable Organizations with No Services: Charitable or nonprofit organizations that solicit donations without providing any apparent charitable services or show open support for Hamas’s activities. Such entities might also solicit donations on social media or encrypted messaging platforms, sometimes in virtual currency.
• Large Donations to Charities: Charitable organizations receiving significant donations in a short span and subsequently transferring large sums to other charities.
• Transactions with Suspected Virtual Addresses: Engaging in transactions with virtual currency addresses known or suspected to be linked to terrorism or its financing.

If financial institutions detect any of the above red flags or any other suspicious activity that might indicate support to Hamas or its activities, they should:

• File a Suspicious Activity Report (SAR).
• Reference the alert in the SAR by including the key term “FIN-2023-TFHAMAS” in SAR field 2 and in the narrative.
• Select SAR field 33(a) to indicate known or suspected terrorist/terrorist organization financing.

Financial institutions are frontline defenders in the battle against terrorist financing. By being vigilant, understanding the red flags, and reporting suspicious activities promptly, they can play a pivotal role in preventing future attacks and safeguarding global security.