In response to the recent attacks on Israel, both the US and UK authorities have taken decisive action against entities suspected of financing terrorism through cryptocurrency. The US Treasury’s Office of Foreign Assets Control (OFAC) and the UK’s Office of Foreign Sanctions Implementation (OFSI) have imposed sanctions on two individuals and three entities allegedly involved in fundraising for Hamas, a Palestinian Sunni Islamist political entity.
One of the sanctioned entities, Gaza Now, a social media outlet based in Gaza, has been accused of promoting pro-Hamas content and facilitating fundraising efforts for the organization. Additionally, two London-based businesses, Al-Qureshi Executives and Aakhirah Limited, along with their director Aozma Sultana, have also been targeted for their alleged involvement in financing terrorism.
The Role of Cryptocurrency in Funding Terrorism
Gaza Now, in particular, has been identified as a key player in promoting crypto donation campaigns for Hamas. According to Chainalysis, a blockchain intelligence firm, some of the addresses linked to Gaza Now began receiving funds in 2021, but the efforts intensified after the October 7 attacks. The channel frequently changed donation addresses, posted and deleted requests for donations, and switched between different cryptocurrencies to evade detection.
The analysis by Chainalysis also revealed that the majority of the funds flowing into the flagged addresses originated from mainstream crypto exchanges. Moreover, some of the money came from wallets that were previously seized by law enforcement agencies, as well as from Iranian and Gaza-based exchanges. Gaza Now’s personal wallets received over $40,000 in various cryptocurrencies, indicating a significant flow of funds through the platform.
Money Laundering and Concealment Tactics
The use of instant exchanges, crypto tumblers, and smart contracts has further complicated the tracking of these illicit financial activities. Donors have been employing these tactics to conceal their identities and obscure the trail of funds, making it challenging for law enforcement agencies to trace the transactions back to their source.
Chainalysis noted that most of the incoming transactions to Gaza Now were of relatively small amounts, with the majority being under $10,000. However, the firm speculated that larger transfers could be internal movements of funds within the entity or its associates, rather than donations from external sources.
The recent crackdown on entities involved in financing terrorism through cryptocurrency highlights the increasing use of digital assets for illicit activities. The collaboration between regulatory authorities and blockchain intelligence firms is crucial in identifying and disrupting these networks, ultimately safeguarding the integrity of the global financial system.