In the wake of the October 7th attacks on Israel, the US Treasury’s Office of Foreign Assets Control (OFAC) and the UK’s Office of Foreign Sanctions Implementation (OFSI) have intensified their efforts to crack down on entities associated with terrorism financing through cryptocurrency. This crackdown has led to the imposition of fresh sanctions on two individuals and three entities allegedly involved in fundraising for Hamas, a Palestinian Sunni Islamist political entity.
Sanctioned Entities and Individuals
Among the entities targeted by the recent sanctions are Gaza Now, a Gaza-based social media outlet, and two London-based businesses, Al-Qureshi Executives and Aakhirah Limited. Mustafa Ayash, the founder of Gaza Now, and Aozma Sultana, the director of the London businesses, were also singled out for their purported roles in promoting pro-Hamas content and facilitating fundraising efforts for the organization. These individuals and entities have been accused of leveraging crypto donation campaigns to finance Hamas’s activities.
Gaza Now, in particular, has been under scrutiny for its crypto donation campaigns, with some addresses associated with the organization receiving funds as early as 2021. However, following the October 7 attacks and the subsequent increase in attention, Gaza Now intensified its fundraising efforts, frequently changing donation addresses and switching between different cryptocurrencies to evade detection. The modus operandi involved posting and deleting donation requests on social media platforms, with the majority of incoming transactions originating from mainstream crypto exchanges.
According to investigations by Chainalysis, a blockchain intelligence firm, the flagged addresses linked to Gaza Now received funds from wallets previously seized by authorities, an Iranian exchange, and a money services business in Gaza. Additionally, Gaza Now’s personal wallets were found to have received over $40,000 in various crypto assets, with transactions facilitated by instant exchanges, crypto tumblers, and smart contracts to obscure the origin of funds. The pattern of incoming transactions, mostly amounting to less than $10,000, suggests a deliberate effort by donors to avoid detection.
Speculations and Challenges in Monitoring
Chainalysis speculates that larger transfers to Gaza Now may represent internal movements of funds rather than external donations, posing challenges for authorities in tracking and intercepting illicit financial flows. Moreover, the use of sophisticated fund transfer mechanisms such as instant exchanges and smart contracts further complicates efforts to monitor and disrupt terrorism financing activities conducted through cryptocurrency channels.
The recent sanctions imposed by the US and UK on entities involved in terrorism financing through cryptocurrency underscore the growing threat posed by illicit financial activities in the digital realm. As regulatory authorities ramp up their efforts to combat such activities, it becomes imperative for stakeholders in the cryptocurrency ecosystem to enhance compliance measures and adopt robust monitoring mechanisms to prevent the misuse of digital assets for terrorist financing purposes. The evolving nature of crypto fundraising campaigns and the use of complex fund transfer mechanisms highlight the need for greater vigilance and cooperation among global regulators to safeguard the integrity of the financial system.