Terrorist Financing: Hamas and Cryptocurrency Fundraising
Updated November 27, 2023
Terrorist Financing: Hamas and Cryptocurrency Fundraising
Policymakers, including some Members of Congress, are
terrorist groups between 2021 and 2023. In April 2023, the
scrutinizing U.S. efforts to counter the role that
Qassam Brigades announced it would stop accepting
cryptocurrency fundraising plays in the financing of
Bitcoin donations, cautioning that donors could be targeted.
terrorism. A key question for Congress is whether further
regulation of the virtual asset sector and/or the introduction
Recent Developments
of additional countermeasures are necessary to prevent
Since October 7, authorities appear to be on alert for signs
terrorist financing. The issue has attracted congressional
that Hamas-linked entities may have resumed soliciting
attention in the wake of the October 7, 2023, attacks on
cryptocurrency donations, in order to fund the current
Israel perpetrated by Hamas—an Iran-supported Palestinian
Israel-Hamas conflict. On October 10, Israeli authorities
group identified by the United States and some others as a
reportedly moved to freeze additional Hamas-linked
terrorist organization subject to sanctions. U.S. government
cryptocurrency accounts. For its part, the U.S. Department
reports indicate that Hamas has sought cryptocurrency
of the Treasury has engaged U.S. and international
through donation drives since at least 2019.
stakeholders in efforts to deter terrorist fundraising through
cryptocurrencies. Treasury has also taken the following
Role of Cryptocurrency Donations in
actions:
Hamas Fundraising Campaigns
• Sanctioned additional Hamas operatives and financial
Although Hamas has reportedly solicited cryptocurrency
facilitators—including a Gaza-based virtual currency
donations, the scale and effectiveness of these efforts
exchange (Buy Cash Money and Money Transfer
remain unclear. Citing two cryptocurrency analytics firms
Company) and its operator.
and Israeli government seizure orders, the Wall Street
Journal reported on October 10, 2023, that cryptocurrency
• Issued an “alert” to financial institutions to counter
wallets connected to Hamas received about $41 million
Hamas-related terrorist financing. In the alert,
between 2020 and 2023 and that wallets connected to
Treasury’s Financial Crimes Enforcement Network
another U.S.-designated terrorist organization, the Palestine
(FinCEN) noted the variety of ways in which Hamas
Islamic Jihad (PIJ), received as much as $93 million over a
raises funds, including “fundraising campaigns
similar period. Some observers have questioned whether
involving virtual currency and fictitious charities raising
such figures overestimate the amount Hamas received and
both fiat and virtual currency.”
note the role of other, larger funding sources that sustain
• Published a notice of proposed rulemaking (NPRM) that
Hamas (e.g., the Iranian government, extortion and de facto
determined that transactions involving convertible
taxation in Gaza, foreign investments, and charities).
virtual currency (CVC) mixing are “of primary money
Origins
laundering concern” and proposed the application of
enhanced recordkeeping and reporting obligations on
In 2019, Hamas engaged in a cryptocurrency donation
covered financial institutions, pursuant to the first
campaign that led to the U.S. seizure of several websites
special measure outlined in Section 311 of the USA
and 150 cryptocurrency accounts linked to the armed wing
PATRIOT Act (P.L. 107-56; codified at 31 U.S.C.
of Hamas, the Izz al Din al Qassam Brigades, in 2020. In
5318A). (Mixers are applications that obscure the
connection with these enforcement actions, the U.S.
senders and recipients of cryptocurrency transactions,
Department of Justice (DOJ) charged two foreign nationals
complicating efforts to trace funds.)
for money laundering crimes related to their involvement in
converting cryptocurrency into other forms of value. DOJ
• Hosted a FinCEN Exchange to discuss threats posed by
also prosecuted an individual for concealing material
illicit cryptocurrency use in light of Hamas’s attack on
support to Hamas, including through Bitcoin. U.S.
Israel and the role of the financial industry in countering
enforcement actions in 2023 revealed that Qassam Brigades
the financing of terrorism (CFT). FinCEN encouraged
used Binance, a cryptocurrency exchange, to facilitate
financial institutions to register under the voluntary
cryptocurrency transactions since as early as 2019.
information sharing program under Section 314(b) of
the USA PATRIOT Act.
Following its initial cryptocurrency campaign, Hamas’s
• Settled with Binance over money laundering and
efforts to generate cryptocurrency donations continued to
sanctions violations (more than $4 billion in penalties),
garner attention from prospective donors as well as law
including failure to report transactions associated with
enforcement authorities. In 2021, the U.S. cryptocurrency
the Qassam Brigades, PIJ, and other terrorist groups.
exchange platform Coinbase identified Hamas as one of
several terrorist groups involved in cryptocurrency
fundraising. Israeli authorities reportedly seized dozens of
cryptocurrency addresses linked to Hamas, PIJ, and other
https://crsreports.congress.gov
Terrorist Financing: Hamas and Cryptocurrency Fundraising
U.S. Policy Framework for CFT and
Congressional Outlook
Cryptocurrency Regulation
Concern regarding the possibility that Hamas has benefitted
Contemporary U.S. CFT policy is grounded in anti-money
from cryptocurrency donations prompted some Members of
laundering (AML) and counterterrorism policies that
Congress to write several letters to the Biden
predate the advent of virtual assets and virtual asset service
Administration. One such letter, with more than 100
providers (VASPs). At issue is whether and how to modify
signatures, urged the Administration to “swiftly and
existing AML/CFT policies and regulations to reflect the
categorically act to meaningfully curtail illicit crypto
risks and opportunities posed by virtual assets.
activity and protect our national security and that of our
allies.” In several congressional committee hearings since
U.S. Regulatory and Sanctions Framework for CFT
October 7, some Members have raised questions regarding
The cornerstone of U.S. AML policy originated in 1970
the role of terrorist fundraising through cryptocurrencies.
with the Bank Secrecy Act (BSA; P.L. 91-508) and its
major component, the Currency and Foreign Transactions
Congressional attention to the terrorist financing risks
Reporting Act. Designations and prohibitions against state
posed by cryptocurrencies is ongoing amid broader debates
sponsors of terrorism and foreign terrorist organizations
surrounding virtual asset governance and whether the sector
emerged in the late 1970s and evolved through the 1990s.
requires additional legislation, regulation, and supervision.
In response to the Al Qaeda attacks on the United States on
Stakeholders have sought to balance the opportunities that
September 11, 2001 (9/11), Congress took additional CFT
the virtual asset sector may portend for financial sector
actions through the enactment of several public laws,
innovation and financial inclusion with the susceptibility of
including the USA PATRIOT Act and its major component,
virtual assets to misuse. Some observers further note that
the International Money Laundering Abatement and Anti-
certain aspects of the virtual asset ecosystem (e.g.,
Terrorist Financing Act of 2001.
decentralized participants that comprise a network, such as
nodes and miners) are not consistently regulated, especially
In response to 9/11, President George W. Bush also issued
internationally. Others caution against proposals for
Executive Order (E.O.) 13224, which established a new
regulation that may be overly broad and ill-equipped to deal
counterterrorism sanctions program targeting specially
with the characteristics of the virtual asset industry and
designated global terrorists (SDGTs). In 2019, President
stifle innovation.
Donald Trump issued E.O. 13886, amending E.O. 13224 to
expand the scope of sanctionable activity and authorize
Proponents of enhanced cryptocurrency regulation may
secondary sanctions against foreign financial institutions
point to perceived gaps in AML/CFT compliance among
that have knowingly conducted or facilitated a significant
VASPs, including well-known cryptocurrency exchanges
financial transaction on behalf of an SDGT. Digital
(e.g., Binance and Bizlato) and mixers (e.g., Blender.io and
currency addresses, including one related to a Hamas-linked
Tornado Cash). In practice, U.S. authorities are challenged
exchange, have been sanctioned under the SDGT program.
to enforce BSA requirements on foreign-headquartered
transmitters, even if the exchanges conduct business with
AML/CFT Regulations for Virtual Assets
U.S. persons. FinCEN’s October 2023 NPRM on CVC
AML/CFT requirements for money services businesses
mixers noted that no such mixers have registered in the
(MSBs) under the BSA (finalized in a 2011 FinCEN
United States as MSBs—underscoring concerns regarding
rulemaking) generally apply to VASPs that act as money
the apparent lack of AML/CFT compliance among such
transmitters (a type of MSB). FinCEN issued guidance in
VASPs. Other observers may question whether regulatory
2013 and 2019 to clarify that such VASPs are required to
changes to the cryptocurrency industry will significantly
(1) register with FinCEN as MSBs; (2) maintain an AML
affect terrorist financing. At congressional hearings held
program; and (3) follow recordkeeping, monitoring, and
since October 7, witnesses testified that the appeal of
transaction reporting requirements, in line with
cryptocurrency for financing terrorist groups in particular,
requirements for MSBs. Such reporting requirements
including Hamas, may be limited due to their susceptibility
include filing suspicious activity reports and currency
to detection by authorities (blockchain ledgers that record
transaction reports. Applicable AML/CFT requirements
crypto transactions are publicly visible) and the availability
also include verifying customer identities and conducting
of other funding sources and laundering methods.
related customer due diligence.
Legislation in the 118th Congress contains provisions to
FinCEN has clarified that these requirements apply to
address certain aspects of the virtual asset sector. For
domestic and foreign-located CVC money transmitters that
example, the two versions of a National Defense
do business “in substantial part within the United States,”
Authorization Act for Fiscal Year 2024 (NDAA; H.R. 2670
even if they are headquartered outside the United States and
and S. 2226) would require bank supervisors and federal
have no physical U.S. presence. FinCEN considers
regulators to establish AML/CFT examination standards for
centralized and decentralized exchanges to be money
financial institutions relating to crypto assets. The NDAA
transmitters subject to AML/CFT requirements. In contrast,
bills would also require Treasury to report to Congress on
CVC users, including those who use cryptocurrency to buy
anonymity-enhancing services, such as mixers, and
goods and services, are not considered to be money
recommend policy options for preventing their use by illicit
transmitters and are exempt from BSA requirements.
actors. Other bills have sought to address Hamas-specific
illicit financing (e.g., H.R. 340, H.R. 6322, and S. 1647).
https://crsreports.congress.gov
Terrorist Financing: Hamas and Cryptocurrency Fundraising
Paul Tierno, Analyst in Financial Economics
Rena S. Miller, Specialist in Financial Economics
Liana W. Rosen, Specialist in International Crime and
IF12537
Narcotics
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF12537 · VERSION 2 · UPDATED