Article 09.11.23
Alert
11.01.23
Following the October 7 attack on Israel by Hamas, the Treasury Department’s Office of Foreign Assets Control (OFAC) has undertaken several initial sanctions steps to counter terrorist financing and call attention to financing networks, ongoing proliferation and terrorist support by Iran and due diligence expectations.
On October 18, 2023, OFAC imposed additional sanctions on 10 key Hamas terrorist group members, operatives and financial facilitators operating in Gaza, Sudan, Türkiye, Algeria and other countries. These sanctions, announced during President Biden’s visit to Israel, target Hamas’s financing network, Palestinian Islamic Jihad (PIJ) and tens of millions of dollars in diverted funds. Both Hamas and PIJ were formally designated by the State Department as terrorist organizations in October 1997. This action builds on OFAC’s May 2022 designation of officials and companies involved in managing Hamas’s secret international investment portfolio.
According to OFAC, those designated in this action “have operated under the guise of legitimate businesses and their representatives have attempted to conceal Hamas’s control over their assets. This investment network is directed by the highest levels of Hamas leadership and has allowed Hamas senior officials to live in luxury while ordinary Palestinians in Gaza struggle in harsh living and economic conditions.”
Specifically, the October 18 sanctions target operatives managing assets in a secret Hamas investment portfolio, a Persian-Gulf financial facilitator with close ties to the Iranian regime, a key Hamas commander, and a virtual currency exchange operating in the Gaza Strip.
On October 27, 2023, OFAC announced a second round of sanctions on key Hamas-linked officials and financial networks. These sanctions target additional assets in Hamas’s investment portfolio, individuals who are facilitating sanctions evasion by Hamas-affiliated companies, and a Hamas official in Iran. Notably, these sanctions also designate members of Iran’s Islamic Revolutionary Guard Corps (IRGC), as well as a Gaza-based entity that has served as a conduit for illicit Iranian funds to Hamas and PIJ.
Impacted persons include the following:
Investment Portfolios
Hamas Operatives
Iranian Supporters of Hamas
Virtual Currency Fundraising
Iran-Related Sanctions
OFAC issued additional sanctions against Iranian actors who are enabling Iran’s destabilizing ballistic missile and unmanned aerial vehicle (UAV) programs. Those sanctioned include eight entities, one vessel and 11 individuals who have materially supported Iran’s IRGC, Ministry of Defense and Armed Forces Logistics (MODAFL), or their subordinates in the production and proliferation of missiles and UAVs. OFAC noted this action was taken as the UN’s restrictions on Iran’s missile-related activities under UN Security Council Resolution 2231 (UNSCR 2231) expire, in an effort to counter the threat posed by Iran’s procurement, development and proliferation of missiles, UAVs and other military weapons.
As noted above, the October 27 sanctions also included the sanctioning of a Hamas official residing in Iran, and members of Iran’s IRGC.
Increased Due Diligence
The October 18 designations followed remarks from the Under Secretary for Terrorism and Financial Intelligence, Brian Nelson, who stressed on October 17 that the Department of Treasury is dedicated to further disrupting Hamas’s financial network through a variety of tools, including anti-money laundering measures. Nelson noted that Hamas is a uniquely resourced terrorist group with several methods of accessing the formal financial system. In addition to significant financial support from Iran, revenue generated through secret investment portfolios, and extortionary practices surrounding border controls and local populations, Nelson highlighted that Hamas also receives donations from around the world. These donations are received directly or funneled through fictitious charitable organizations.
Nelson stressed that U.S. financial institutions can play a critical role in cutting off Hamas’s ability to access financing. Institutions can provide insight on how Hamas is attempting to reconstitute investment portfolios, open sham charities or exploiting virtual assets to draw in obscure funds. He encouraged financial institutions to continue flagging tips, leads, social media posts, account numbers and virtual currency wallet addresses.
Looking Ahead
The U.S. government is expected to continue to expand sanctions designations related to Hamas, PIJ and their networks and may consider sanctions designations and enforcement actions where parties have facilitated access to financial and military resources or enabled the evasion of U.S. sanctions.