The Israel-Hamas conflict in Gaza has pushed into the limelight an issue that’s been seething on the back burner for nearly a decade: the funding networks for terrorism.
Now U.S. and other Western governments have refocused on the problem. This goes especially for terrorists’ use of digital money – or cryptocurrency – that can be flashed around the world without the scrutiny of banks or regulators.
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Anti-terrorism is a cat-and-mouse game. The Oct. 7 Hamas attack put a focus on the use of cryptocurrency by terrorist groups. Now, the United States shows signs of cracking down. Will the vigilance last?
And there’s a larger strategic issue: Just as Israeli and other intelligence agencies disregarded signs of a military buildup in Gaza, finance watchdogs were preoccupied with other matters. They missed the chance to squeeze Hamas’ and other groups’ funding before these groups could act. (Hamas has been designated a terrorist organization by the U.S. State Department since 1997.)
“We have taken our eyes off the ball,” says Louise Shelley, director of the Terrorism, Transnational Crime and Corruption Center at George Mason University. “I know it from the most reputable sources that the government is not collecting the data that it needs to be on either cryptocurrency or the use of credit cards, which is an essential way that Hamas is being funded at the moment.”
Actions in recent weeks suggest this may change. The U.S. Treasury, for example, reached a $3.4 billion settlement with the cryptocurrency exchange Binance over its lack of safeguards.
The Israel-Hamas conflict in Gaza has pushed into the limelight an issue that’s been seething on the back burner for nearly a decade: the funding networks for terrorism.
Now, U.S. and other Western government watchdogs, legislators, and others have refocused on the problem. And especially on terrorists’ use of digital money – or cryptocurrency – that can be flashed around the world without the scrutiny of banks or regulators.
It’s easy to overstate the importance of cryptocurrency. Violent nonstate groups receive far more money through other formal and informal financial systems than from using bitcoin and other digital money, terror-finance experts say. But it’s still a concern, and the larger problem is a strategic one.
Why We Wrote This
A story focused on
Anti-terrorism is a cat-and-mouse game. The Oct. 7 Hamas attack put a focus on the use of cryptocurrency by terrorist groups. Now, the United States shows signs of cracking down. Will the vigilance last?
Just as Israeli and other intelligence agencies disregarded signs of a military buildup in Gaza, finance watchdogs were preoccupied with other matters. They missed the chance to squeeze Hamas’ and other groups’ funding before these groups could act. (Hamas has been designated a terrorist organization by the U.S. State Department since 1997.)
“We have taken our eyes off the ball on terrorism issues,” says Louise Shelley, director of the Terrorism, Transnational Crime and Corruption Center at George Mason University. “I know it from the most reputable sources that the government is not collecting the data that it needs to be on either cryptocurrency or the use of credit cards, which is an essential way that Hamas is being funded at the moment.”
There are signs this may change.
Hamas’ brutal Oct. 7 attack on Israel has brought with it renewed scrutiny. On Nov. 27, the U.S. Treasury Department disclosed the existence of a terror-finance task force it joined with a dozen other nations and fraud-fighting groups in the immediate aftermath of the attack. Those nations include Israel, Australia, Germany, and tax havens Liechtenstein, Luxembourg, and Switzerland.
And cryptocurrency has become a focus. For example:
• Among the first entities sanctioned by the Treasury less than two weeks after the October attack was a Gaza-based cryptocurrency exchange, called Buy Cash Money and Money Transfer Company. Israel has linked the firm to a Hamas fundraising campaign and the United States. The U.S. Treasury claims the firm has been used by an Al Qaeda affiliate in Turkey and individuals connected to the Islamic State of Iraq and Syria (ISIS).
• Also in October, a bipartisan group of 105 U.S. senators and representatives urged the Biden administration to crack down on terrorists’ use of cryptocurrency. The action came a week after The Wall Street Journal reported that Hamas and its ally Palestinian Islamic Jihad received as much as $134 million in digital funds between August 2021 and June 2023.
• On Nov. 21, the Treasury’s Financial Crimes Enforcement Network announced a record $3.4 billion fine in a settlement with the world’s largest cryptocurrency exchange,
