Under Secretary for Terrorism and Financial Intelligence Brian Nelson at Deloitte’s 15th Annual Anti-Money Laundering Conference
[…] First, I’ll discuss Treasury’s efforts to counter terrorist financing, including our long-standing fight against the funding of Hamas. Second, I’ll cover the urgent and immediate steps that we are taking to deny Hamas access to funding streams. And third, I’ll discuss our strengthening of the United States’ Anti-Money Laundering Countering the Financing of Terrorism (AML/CFT) Regime in order to stomp out terrorists and other illicit actors from our financial system.

By Brian Nelson

Hamas’ financing operations

Hamas is a uniquely resourced terrorist group. It’s comprised of a large number of fighters, a cache of drones, rockets, munitions, and other supplies, as well as training and storage facilities throughout Gaza. It owns substantial Financial assets and possesses well-honed methods of surreptitiously accessing the formal financial system.

While Hamas receives significant financial support from Iran, it also generates vast sums of revenue through its secret investment portfolios, with a network of global assets estimated to be worth hundreds of millions of dollars. These types of investments have allowed senior Hamas officials to live in luxury, including elsewhere in the Middle East, while ordinary Palestinians in Gaza face harsh living conditions and dire economic prospects. Treasury has targeted, and will continue to target, these portfolios and those who service them.

Hamas also raises revenue from its control of border crossings and avenues of commerce, racketeering business frameworks, and extortionary practices around local populations. Notably, it also receives donations from around the world, both directly and by illicitly funnelling money through fictitious charitable organizations.

We are closely monitoring how Hamas and Palestinian Islamic Jihad (PIJ) use virtual assets to raise and move funds, one of the many tools they’ve leveraged to circumvent the traditional Financing sectors. We are in active collaboration with our counterparts who have seized hundreds of Hamas and PIJ accounts from virtual asset service providers, and Treasury will continue to establish transparency in the virtual asset ecosystem in order to combat illicit activity by criminals, rogue states, and terrorist financiers.

Treasury’s efforts against Hamas

Disrupting Hamas’ financing operations is not new to us; this has been a priority for Treasury for decades. We are equipped to target this infrastructure and its supporters, whether they be political leadership, operatives, facilitators, financiers, investors, or entire global procurement networks.

Treasury has worked closely with key jurisdictions that are vulnerable to Hamas’ illicit financial networks in order to improve their AML/CFT frameworks, expose these webs of connection, and facilitate host-nation enforcement and regulatory actions. We are not alone in recognizing the risks Hamas poses to domestic and global financial systems, and our regional allies have played been pivotal in providing insights into Hamas’ financial underbelly, as well as amplifying our attacks with their own actions. We want to partner with all willing countries and financial entities to stop Hamas financing, but to the extent that any institution or jurisdiction fails to take appropriate action, they should then be prepared to suffer the consequences.

Since 9/11, the US has sanctioned dozens of Hamas-affiliated individuals and entities across the globe, including a host of charitable organizations that have served as critical fundraising mechanisms for their terrorism – some even operating in the United States and Europe.

I want to highlight some specific actions to illustrate some of their financial machinations of Hamas:

In 2022, Treasury targeted Hamas’ global investment portfolios, a network of companies run by Hamas-associated businessmen with an estimated value of over $500 million. Hamas operates a vast network of shell companies to store and move funds outside of Gaza, including entities operating in Türkiye, Saudi Arabia, the United Arab Emirates, Sudan, and Algeria.

Permissive jurisdictions facilitate Hamas’ networks of terrorism, as well as their ties to destabilizing regional actors. In late 2019, Treasury designated six individuals and one entity for their ties to Hamas, including a senior Hamas financial leader, Zaher Jabirin, as well as one of the primary Iranian Qods Force liaisons to Hamas, Muhamad Izadi.  Zaher Jabarin served as the head of Hamas’ Finance Department where he developed a financial network that allowed Hamas to raise, invest, and launder vast sums of money. We also designated the Redin Exchange, a money remitter based in Türkiye that transferred tens of millions of dollars to Hamas.

We engage regularly with the regional governments where Hamas operates, including Türkiye, to work with us to take action against terrorist groups, and we will seek to partner with them to disrupt Hamas’ financial networks in the coming weeks. We support the significant progress Türkiye has made to address deficiencies in its AML/CFT regime as identified in their Financial Action Task Force (FATF) Mutual Evaluation. But Hamas poses a direct threat to the integrity of the region’s financial system, and now is the time for their government to strengthen its AML/CFT regimes and decisively close these avenues of funds that directly support Hamas’ acts of violence.

As the past few weeks have shown the world, Hamas continues to threaten regional stability and security, and we will continue to take serious actions as we have done for nearly two decades.

Looking ahead

Treasury will bring our tools to bear against Hamas’ financing and the overall funding of terrorism. But in order to be effective, it must be a collective effort by the US government, our partners and allies, and the private sector. I’m sharing so much detail today because I want you to be prepared to join our effort to ensure that the US and international financial systems cut off Hamas’ ability to fuel their campaign of violence.

You may very well be the ones to provide a critical piece of insight into how Hamas is seeking to reconstitute their investment portfolios, opening sham charities to further siphon aid from the people of Gaza, or exploiting virtual assets to draw in obscure funds.

We know Hamas is leveraging the tragedy it created to further finance its ambitions of terrorism. We are already seeing online grassroots campaigns, linked to so-called charities that we’ve previously designated in Kuwait, solicit funds under the guise of humanitarianism.

We are also seeing suspicious fundraisers, likely linked to Hamas, post on social media to leverage US peer-to-peer payment providers and credit card networks. We are working closely with various institutions to exchange information on Hamas financing networks to stop this activity, and we encourage further flagging of tips, leads, social media posts, account numbers, and virtual currency wallet addresses. We look forward to expanding this type of collaboration with both domestic and foreign institutions as we all work to stomp out terrorist financing.

Of course, as in all US sanctions programs, our counter-terrorism sanctions retain licensing authorizations to permit the efforts of certain international organizations, including the United Nations and the ICRC, as well as specified transactions in support of pre-determined, legitimate NGO activities. Our commitment to humanitarian activity will never wane.

However, we need to be vigilant that exploiting the humanitarian space is a tried-and-true tactic of Hamas.

Ultimately, we hope this will be expand the conversations with leaders in the financial sector on how to enhance our insights and amplify our actions.

Treasury’s regulatory agenda

Beyond our efforts to deny funds to Hamas and other terrorist organizations, we must also address the systemic deficiencies in the United States’ AML/CFT framework that illicit actors exploit to move, store, and launder funds. As you know, Treasury is undertaking a substantial modernization of the US AML/CFT framework – the biggest set of reforms in the post-9/11 era. Priority number one in our National Strategy for Combatting Illicit Financing is closing the legal and regulatory gaps that illicit actors exploit. This includes enhancing corporate transparency, curtailing money laundering through real estate, and combatting the misuse of sectors that lack comprehensive AML/CFT obligations.

To address beneficial ownership risks, we continue to prioritize the implementation of the Corporate Transparency Act (CTA), which will require certain U.S. and foreign companies to disclose information to FinCEN about persons who own or control the companies. It will also require FinCEN to maintain this information in a secure, non-public database and authorize FinCEN to disclose this information to authorized government authorities and financial institutions, subject to effective safeguards and controls.

FinCEN will begin accepting beneficial ownership information on January 1, 2024.

We recognize that the beneficial ownership information reporting requirements and FinCEN itself, will be new to many businesses across the country, so we are conducting outreach to various stakeholders, including the small business community, and developing guidance materials to inform companies of their reporting obligations.

In parallel, FinCEN is working to finalize a rule for access to beneficial ownership information (“the Access Rule”) to establish who may request and receive beneficial ownership information, how recipients may use it, and how they must secure it.

We’re also focused on addressing the risks associated with non-financed purchases of residential real estate, which we know illicit actors misuse to launder funds. We’re in the process of crafting a proposed rule to enhance the transparency of the sector – building on the data we’ve collected since 2016 from FinCEN’s Geographic Targeting Order (GTO) program, as well as the comments received following the 2021 ANPRM. We hope to publish this proposed rule by year’s end.

We are also turning our sights to investment advisers, a set of professionals in a $120 trillion sector that are generally not subject to comprehensive AML/CFT obligations. Investment advisers have facilitated the movement of illicit proceeds tied to a range of predicate crimes – including foreign corruption, fraud, tax and sanctions evasion, and can also be exploited by our adversaries to invest in sensitive US technologies. We are conducting risk assessments on this sector and are considering possible policy options.

These regulatory initiatives reinforce and complement our broader work under the AML Act to streamline, modernize, and strengthen the United States’ AML/CFT regime. They will make it harder for criminals and terrorists to abuse the formal financial system to raise and move money.

Closing

I know these recent events have instilled a sense of urgency in all of us. This moment is critical for you to assess your own exposure to this risk and to ensure appropriate controls are in place to protect not only your businesses, but also human life.

This is a moment we must meet together. We cannot tolerate a world in which terrorist financiers live and operate with impunity, abuse the financial system, and consequently sustain a reign of terror.

Your efforts will help prevent and deter this evil financing of terrorism. They will also make our financial system at large more secure and broadly less susceptible to various forms of abuse.

We’re grateful for your continuing work to fight financial crime and, as always, appreciate hearing your perspective on these issues. I encourage you to reach out and share the insights, trends, and challenges that you’re observing with my team.