According to the US Treasury Department’s bureau tasked with combating the financing of terrorism, financial institutions reported approximately $165 million in potential cryptocurrency transactions that may be linked to Hamas. The Financial Crimes Enforcement Network (FinCEN), as revealed in a letter signed by US Deputy Treasury Secretary Wally Adeyemo, analyzed suspicious activity reports documented between January 2020 and October 2023. The letter indicates an urgent need for legislative measures to expand the Treasury Department’s oversight authority over cryptocurrency transactions.
Support from US Senate Needed
In the letter sent by Adeyemo to the leaders of the US Senate Banking and House Financial Services Committees, the need for the US Senate’s support in addressing the potential threats posed by cryptocurrency transactions linked to terrorism financing was emphasized.
The $165 million figure reported by FinCEN is uncertain, as financial institutions may have attributed the entire value of customer transactions, including both fiat and cryptocurrency activity, to Hamas, meaning only a portion of the reported activity may be related to such transactions.
FinCEN‘s analysis identified over 200 cryptocurrency addresses potentially associated with these transactions, demonstrating the scope of the ongoing investigation into the misuse of cryptocurrencies for illegal purposes. Adeyemo acknowledged that terrorists prefer traditional financial products and services but expressed concern about their growing interest in cryptocurrencies as access to traditional finance becomes restricted.
Hamas-Israel Conflict Spurs Search for More Authority
The Treasury Department’s search for more authority to combat illegal activities in the cryptocurrency world follows increased scrutiny by US lawmakers, particularly in light of an attack by Hamas on Israel last October. The attack, which caused significant losses and triggered a humanitarian crisis in Gaza, heightened concerns about the role of cryptocurrencies in financing terrorist activities. In response, US lawmakers called for greater transparency and regulation of cryptocurrency transactions to mitigate potential risks associated with terrorism financing.
Adeyemo’s letter underscores the Treasury Department‘s commitment to modernizing its tools and regulatory framework to address emerging threats in the cryptocurrency world. The proposed legislative measures aim to clarify and expand the scope of entities operating in the cryptocurrency world, while also authorizing the Treasury’s Office of Foreign Assets Control (OFAC) to impose secondary sanctions on cryptocurrency companies that do business with sanctioned entities.
