In the past week, both the Office of Foreign Assets Control (“OFAC”) in the US Treasury Department and the Financial Crimes Enforcement Network (“FinCEN”) took steps related to Hamas, which they indicated were linked to the recent Hamas attacks on Israel.
New OFAC Sanctions
On October 18, 2023, OFAC added a number of parties determined to be connected to Hamas to its Specially Designated Nationals and Blocked Persons List (“SDN”). As described in the Treasury Department press release accompanying the designations, the newly designated SDNs include ten key Hamas members, operatives, and financial facilitators in Gaza and elsewhere including Sudan, Türkiye, Algeria, and Qatar. This included nine individuals and one entity, which the press release described as a Gaza-based business that provides money transfer and virtual currency exchange services, including Bitcoin.
The Treasury Department press release notes that Hamas, Palestinian Islamic Jihad (PIJ), and the Popular Front for the Liberation of Palestine (PFLP) have been designated by the US State Department as Foreign Terrorist Organizations since October 1997 and have been on the SDN List as Specially Designated Global Terrorists (“SDGTs”) since October 2001
US persons are generally prohibited from dealing directly or indirectly with SDNs, entities that are owned 50% or more by one or more SDNs, and their property or property interests. Non-US persons can be held liable for “causing” violations by US persons involving transactions with SDNs and can also be subject to secondary sanctions risks (which would include, in particular, the risk of designation as an SDN themselves) for providing “material support” to SDNs.
On October 20, 2023, the Financial Crimes Enforcement Network (“FinCEN”) issued an alert to assist financial institutions and entities in identifying funding streams for Hamas. This alert was issued to assist and urge financial institutions and entities to conduct diligence to identify suspicious activity that could benefit Hamas.
FinCEN identified in the alert various avenues in which Hamas may be funded, including support from Iran, private donations, global investments, diverting aid and support from legitimate charities, controlling border crossings and avenues of commerce, racketeering business frameworks, extortionary practices around local populations, and fundraising campaigns involving virtual currency and fictitious charities raising both fiat and virtual currency.
The alert includes a list of red flags for financial institutions and entities to recognize, detect, and prevent suspicious activity related to Hamas funding, which we suggest reviewing.
The alert states that questions related to the alert or related questions can be directed to the FinCEN Regulatory Support Section at [email protected].