The United States Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued an alert on October 20 to financial institutions, aiming to help them identify and report “suspicious activity” related to the funding of terrorist groups. In the notice, FinCEN specifically highlighted the militant group Hamas, responsible for the October 7 attack on Israel, which is believed to have used “fundraising campaigns involving virtual currency and fictitious charities raising both fiat and virtual currency” to finance its activities.
Financial institutions were advised to exercise caution with clients who have engaged in transactions with businesses located in regions associated with Hamas, entities already designated as Specially Designated Nationals by the Office of Foreign Assets Control, and individuals or groups soliciting cryptocurrency donations on social media platforms. This alert came shortly after FinCEN proposed categorizing crypto mixing as a primary concern related to money laundering in the context of terrorism.
The issuance of this alert also follows the concerns expressed by U.S. lawmakers after the Hamas attack on Israel. Over 100 members of Congress called upon President Joe Biden’s administration on October 17 to take swift and decisive action to significantly curb illicit cryptocurrency activity.
Furthermore, U.S. Treasury officials added a Gaza-based cryptocurrency operator allegedly linked to Hamas to the list of sanctioned entities. This move underscores the government’s determination to combat the use of cryptocurrencies for illicit purposes and to strengthen measures to prevent terrorist financing.
It’s important to note that this isn’t the first time FinCEN has issued such warnings. In March 2022, a similar alert was issued, warning financial institutions about Russian entities attempting to evade sanctions using cryptocurrencies, following the Russian military’s invasion of Ukraine in February 2022.
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