On October 20, 2023, FinCEN issued an alert to assist financial institutions in identifying funding streams for the terrorist organization Hamas. FinCEN’s action is, according to their press release, a response to Hamas’ horrific terrorist attack on the people of Israel, wherein 1,000 innocent civilians, including citizens of the United States, were wounded, killed, or taken hostage.
FinCEN’s alert contains red flags that FinCEN has identified to help detect, prevent, and report potential suspicious activity related to Hamas’ terrorist financing activity. These red flags include:
A customer or a customer’s counterparty conducts transactions with OFAC-designated entities and individuals, or transactions that contain a nexus to identifiers listed for OFAC-designated entities and individuals, to include email addresses, physical addresses, phone numbers, or passport numbers, or virtual currency addresses.
Information included in a transaction between customers indicates support for terrorist campaigns.
A customer conducts transactions with a Money Services Business (MSB) or other financial institution, including one that offers services in virtual currency, that operates in higher-risk jurisdictions tied to Hamas activity, and is reasonably believed or suspected to have lax customer due diligence (CDD) requirements, opaque ownership, or otherwise fails to comply with anti-money laundering/combatting the financing of terrorism (AML/CFT) best practices.
A customer conducts transactions that originate with, are directed to, or otherwise involve entities that are shell corporations, general “trading companies,” or other companies that have a nexus with Iran or other Iran-supported terrorist groups, such as Hizballah and Palestinian Islamic Jihad
A customer that is a charitable organization or nonprofit organization (NPO)10 solicits donations but does not appear to provide any charitable services or openly supports Hamas’s terrorist activity or operations. In some cases, these organizations may post on social media platforms or encrypted messaging apps to solicit donations, including in virtual currency.
A customer that is a charitable organization or NPO receives large donations from an unknown source over a short period of time and then sends significant wire transfers or checks to other charitable organizations or NPOs.
A customer conducts transactions with known or suspected virtual currency addresses tied to terrorism or terrorist financing donation campaigns.
FinCEN is urging financial institutions to be vigilant in identifying suspicious activity relating to financing Hamas and reporting such activity to FinCEN
FinCEN’s press release can be found here.
The full Alert can be found here.