Global Sanctions Dashboard: How Hamas raises, uses, and moves money

Econographics

March 20, 2024 • 9:40 am ET

Global Sanctions Dashboard: How Hamas raises, uses, and moves money

By
Kimberly Donovan, Maia Nikoladze, Ryan Murphy, and Alessandra Magazzino

Key takeaways

  • Hamas managed an investment portfolio worth at least $500 million, despite sanctions on the group.
  • Hamas is not designated as a terrorist group by the UN or by partners in the Arab world. There are gaps in sanctions designations among Western jurisdictions as well.
  • Allies and partners need to develop and share the same level of understanding on the terrorism threat and the risks terrorist financing poses to the global financial system.

Terrorism, and specifically the financing of terrorism, has come back to the top of the national security agenda following Hamas’ October 7 attack on Israel and the spillover effects of Israel’s subsequent war in Gaza.

This past October, the US Treasury sanctioned a network of financial facilitators managing a complex global investment portfolio for Hamas, with assets estimated to be worth hundreds of millions of dollars. These designations and subsequent actions likely disrupted Hamas’ finances and investments, but more importantly shed light on a persistent challenge: A heavily sanctioned entity, designated as a terrorist organization across multiple jurisdictions, was able to take advantage of the international financial system to raise, use, and move significant amounts of funds for its terrorist operations.

In this edition of the Global Sanctions Dashboard, we explore Hamas as a case study to illustrate how designated terrorist groups abuse the global financial system. We will walk you through:

  • How Hamas raises, uses, and moves money;
  • How sanctions are used to counter Hamas and combat the financing of terrorism; and
  • Where governments align and diverge in their approaches to combat this activity.

How Hamas raises and moves money despite sanctions

Hamas has been designated as a foreign terrorist organization by the United States since 1997 and the group is now sanctioned by the European Union (EU) and Group of Seven (G7) allies to varying degrees. Governments have further sanctioned hundreds of individuals and entities associated with Hamas, and thousands more with ties to Iran, Hamas’ primary benefactor. Nevertheless, the group has been able to access the global financial system to amass a diverse stream of income from multiple sources.

In addition to extorting money from the civilian population of Gaza and receiving varying amounts of annual financial support from Iran, estimated to be as much as $100 million, Hamas has created a global investment portfolio valued between $500 million and $1 billion. This portfolio is invested in companies in countries including the United Arab Emirates (UAE), Turkey, and Qatar. Hamas has also effectively exploited the charitable sector and solicited donations from witting and unwitting donors using crowdfunding websites. The US Treasury recently noted that while Hamas and other terrorist groups prefer fiat currencies, there is a risk that they will turn to virtual assets as they lose access to traditional financial services.

Terrorist groups, such as Hamas, and other illicit actors use increasingly sophisticated money laundering techniques including smuggling cash and using shell companies to avoid detection and hide their involvement in financial transactions.

Who has sanctioned Hamas

Terrorist designation gaps across jurisdictions create vulnerabilities for the global financial system and may be one explanation as to how Hamas and its financial facilitators were able to operate within the system and with impunity.

Hamas is not designated as a terrorist group by the United Nations (UN). . . UN member states follow and implement UN designations of terrorist groups, including entities like al-Qaeda and the Islamic State of Iraq and al-Sham (ISIS or ISIL), among several others. However, the UN has not designated Hamas as a terrorist organization. Most countries do not have an autonomous terrorism sanction regime and rely on the UN terrorist designations to inform and justify their counterterrorism efforts.

. . .or sanctioned by Western partners in the Arab world. Treasury’s October tranche of designations included individuals and entities in Turkey, Sudan, Qatar, and UAE—jurisdictions that have not sanctioned Hamas and thus do not have legal restrictions that would prevent Hamas and its facilitators from accessing their financial systems.

There are gaps in sanctions designations among Western jurisdictions. Over the past thirty years, Hamas, in part or in its entirety, has been designated as a terrorist group by various countries in response to its terrorist activity and efforts to destabilize peace operations in the Middle East. Several governments originally only designated Hamas’ “military wing,” the Izz al-Din al-Qassam Brigades, and later began designating the entirety of the organization as a terrorist group.

The lack of a common narrative of what constitutes terrorism and the lack of a coordinated and unified multilateral effort on terrorist designations provide Hamas and other terrorist groups more freedom to operate and abuse sanction loopholes between jurisdictions.

Closing sanctions gaps

Following the October attacks and subsequent war between Israel and Hamas, international partners have come together to close gaps and improve multilateral coordination and enforcement of their sanctions regimes related to Hamas and other groups undermining peace and security in the region.

Engagement with partners in the Middle East. Treasury’s outreach to countries in the Middle East included convening an emergency meeting of the Terrorist Financing Targeting Center (TFTC), which was created in 2017 to enhance information sharing and collaboration on efforts to counter the financing of terrorism. TFTC is focused on the Middle East and includes the United States and the Gulf Cooperation Council (GCC) countries (Saudi Arabia, Qatar, Kuwait, Oman, Bahrain, and the UAE). Engagement with partners in the Middle East is critical to effectively disrupt and address terrorist financing by Hamas and other groups in the region, while working together to prevent further escalation of the Israel-Hamas conflict. It is important to note, however, that these countries have not designated Hamas as a terrorist organization, and based on recent sanctions, we know Hamas has used their financial systems to raise and move funds. The GCC countries need to take action to secure their financial systems, and thereby the global financial system from abuse by Hamas. There are political challenges at play, but the GCC should consider a Council-wide terrorist designation of Hamas, similar to the action it took against Lebanese Hezbollah in 2016.

Information sharing with the private sector. The Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an alert for financial institutions providing guidance and red flags to help identify and subsequently report suspicious activities related to Hamas financing. Such suspicious activities include but are not limited to a customer that is:

  • Transacting with an Office of Foreign Assets Control-designated counterparty,
  • Transacting with a Money Services Business or other financial institutions located in high-risk jurisdictions of Hamas activity, or
  • A charitable or nonprofit organization soliciting donations but not seeming to be providing any charitable services.

Alerts often help financial institutions understand what types of information FinCEN and other countries’ financial intelligence units (FIUs) are most interested in. This information is used to inform law enforcement investigations or national security actions, including financial sanctions. It is reasonable to estimate that the Hamas alert generated additional suspicious activity reporting from financial institutions within the US jurisdiction, which can help FinCEN and its partners identify potential terrorism financing activity related to Hamas.

Information sharing with foreign partners. Information sharing and coordination among FIUs is critical for disrupting terrorist financing. FIUs are national centers responsible for receiving and analyzing suspicious activity reports from financial institutions and publishing red flags and alerts to help them identify suspicious activity and protect their systems. The need to share information and develop a common understanding of the terrorist financing threat was acknowledged after the October 7 attack, when FIUs from Australia, Canada, Estonia, France, Germany, the United Kingdom, the United States, and other like-minded states created the Counter Terrorist Financing Task Force–Israel. In a public statement, this task force committed to expediting and increasing the sharing of financial intelligence in terrorist financing-related issues.

Designation of the Hamas network. In response to Hamas’ October attack, the United States and United Kingdom took coordinated action to designate individuals and entities involved in financing Hamas. The EU and other partners took action to shore up their existing sanctions regimes targeting the group and its facilitators. This is a needed step to counter Hamas and deny the group access to funds to finance its terrorist operations. However, allies need to go beyond Hamas and these specific designations. The terrorism threat is on the rise as a result of escalating tensions in the region. Lebanese Hezbollah is increasing rocket attacks in northern Israel, the Houthis continue to attack shipping vessels in the Red Sea, and other Iranian-backed groups have attacked US forces in Iraq, Jordan, and Syria, killing US soldiers. Allied nations must consistently prioritize counterterrorism and countering the financing of terrorism by aligning their sanctions, sharing information, and coordinating designations. Multilateral coordinated action will prevent terrorist groups from taking advantage of jurisdictional gaps between sanction regimes and will create clarity that helps financial institutions identify and report suspicious terrorist financing activity, which in turn can help governments take appropriate action.

Consider secondary sanctions. When partners do not align on terrorist financing risks, the United States should consider leveraging its secondary sanctions authority (pursuant to Executive Order 13224 as amended) to target the foreign financial institutions that continue to facilitate terrorist financing within the global financial system. The use of secondary sanctions sends a strong message that may deter third parties from providing material or financial support to US-designated terrorist groups and will unilaterally shore up gaps in international sanctions regimes that pose a threat to the US financial system.

Kimberly Donovan is the director of the Economic Statecraft Initiative within the Atlantic Council’s GeoEconomics Center. Follow her at @KDonovan_AC.

Maia Nikoladze is the assistant director at the Economic Statecraft Initiative within the Atlantic Council’s GeoEconomics Center. Follow her at @Mai_Nikoladze.

Ryan Murphy is a program assistant at the Economic Statecraft Initiative within the Atlantic Council’s GeoEconomics Center.

Alessandra Magazzino is a young global professional at the Economic Statecraft Initiative within the Atlantic Council’s GeoEconomics Center. Follow her at @alesmagaz.

Castellum.AI partners with the Economic Statecraft Initiative and provides sanctions data for the Global Sanctions Dashboard and Russia Sanctions Database.

Global Sanctions Dashboard

The Global Sanctions Dashboard provides a global overview of various sanctions regimes and lists. Each month you will find an update on the most recent listings and delistings and insights into the motivations behind them.

At the intersection of economics, finance, and foreign policy, the GeoEconomics Center is a translation hub with the goal of helping shape a better global economic future.

Related Experts:
Kimberly Donovan,
Maia Nikoladze, and
Ryan Murphy




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