This week, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a fresh round of sanctions on Hamas following the October 7 terrorist attack on Israel. Australia and the UK have also joined forces by placing sanctions on key Hamas officials and financial facilitators.
The latest US sanctions target networks of Hamas-affiliated financial exchanges in Gaza, their owners, and associates, and financial facilitators that have played key roles in funds transfers, including cryptocurrency transfers to Hamas.
These financial exchanges include a Gaza-based Herzallah Exchange, which allegedly worked with Hamas to facilitate transactions, including through the use of cryptocurrencies.
Hamas has sought to leverage a variety of financial transfer mechanisms, including the exploitation of cryptocurrency, to channel funds to support the group’s terrorist activities
said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson,
Treasury, in close coordination with our allies and partners, will continue to leverage our authorities to target Hamas, its financiers, and its international financial infrastructure.
Concurrently, Australia has sanctioned Hamas leaders, financial facilitators, and persons who have provided training to terrorist operatives, as well as three entities that have facilitated the transfer of funds to Hamas.
Under Australian law, it is a criminal offence to use or deal with a sanctioned person or entity's assets, or to make assets available to them. This is punishable by up to 10 years' imprisonment and/or heavy fines.
A Media Release by the Hon Penny Wong, the Minister of Foreign Affairs said,
Australia continues to unequivocally condemn the attacks on Israel by Hamas as abhorrent acts of terror against innocent civilians.
Companies and individuals, whether transferring cryptocurrency or not, should exercise caution and carry out counterparty due diligence to avoid breaching sanction laws that may be applicable to them. Furthermore, sanctions laws from different jurisdictions may apply separately or concurrently depending on whether an activity or person has a nexus with the jurisdiction for sanctions purposes.
The use of cryptocurrency in financing Hamas' operations has been the subject of significant political debate in the US, with Senator Warren seizing on a Wall Street Journal (WSJ) report last year indicating significant donation flows in cryptocurrency to terrorist groups. The WSJ's report was later corrected following further analysis from Chainalysis and Elliptic which indicated that the flows were significantly lower than previously reported. The incident nevertheless highlighted the power of blockchain analytics tools in tracking and tracing illicit money flows on chain.
Written by J Huang and S Pettigrove