Terrorist Financing
Crypto, Non-Profit Organisations

Who's Funding Hamas

Indicators:

  • High-risk jurisdiction & sector.
  • Non-Profit Organisations (NPOs) largely rely on contributions from supporters and the general public’s trust. The psychological benefits, including the sense of fulfilment, from donating to charity can make it easy for false charity causes to deceive community members, making them an effective front for garnering donations that may be used illicitly.
  • Jersey, as a jurisdiction, was targeted due to it being a well-known International Finance Centre (IFC) with highly wealthy residents who may be more likely to donate funds.
  • Crowdfunding platforms are an effective fundraising method for terrorist organisations because they attract small donations from large audiences, which can go a long way in contributing to the funding of extremist activities. The widespread reach of social media and the internet allows these campaigns to solicit donations from afar without being hindered by geographical distances. This risk must be assessed further due to the advancements of AI, which will likely make the process easier for the bad actors who sit behind the pages.

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Suspicious Activity:

  • Lack of information about the crowdfunding campaign’s purpose, goals and ultimate beneficiaries.
  • The campaign encourages supporters to provide funds across different platforms or provides instructions to fragment the payments.
  • Use vague and emotionally charged language, e.g. “help innocent people get supplies”.
  • Lack of transparency regarding how the funds would be used.
  • Cryptic information included in transaction references from the Jersey bank account to multiple third parties that could indicate support for Terrorist Financing (TF) campaigns.
  • Lack of transparency on the purpose of the account opened in Jersey.
  • Rapid transfer of funds identified from the Jersey bank account to a online challenger bank account.
  • Transfers from the Jersey bank account were low value and in multiple tranches.
  • When attempting contact with the account holder of the Jersey bank account, the bank received no response.

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FIU Actions:

  • Due to the TF link, the FIU grade this report to the highest level. Additionally, it would be delegated to an FIU officer whose Specialist Point of Contact (SPoC) subject is TF.
  • The risk of potential TF through NPOs has been identified as a geopolitical risk and raised within the Financial Crime Intelligence Threats Task-force (FCI-TT) group, who assess threats that may impact Jersey.
  • The FIU carefully monitors reports which have connections to jurisdictions within / related to the Middle East, given that countries such as Turkey and Qatar have acted as conduits for Hamas TF funding.
  • The FIU to increase awareness of such activities by disseminating educational messaging to the public to prevent public funds from being donated through different mechanisms.
  • All FIU staff have undertaken training centred on the structure of the Islamic world to better understand the cultural elements and financing intricacies of the religion, such as taxation.
  • An agreement with online challenger bank allows the FIU request further information to enable further analysis of transactions associated with the flow from the Jersey bank account to the online challenger bank account.
  • The FIU have dedicated team members who are crypto SPoCs, enabling them to spend time researching and sharing valuable education pieces on the crypto asset ecosystem. In this case, FIU TF SPoCs and FIU Crypto SPoCs collaborated on analysis efforts.
  • The FIU also has a partnership with the States of Jersey Police Counter Terrorism Policing Unit (CTPU), whereby any intelligence with a connection to terrorism is shared and disseminated through secure channels.
  • The FIU works closely with the Jersey Cyber Security Centre (JCSC) to understand the cyber-security threats to the island better and coordinate effectively to tackle illicit finance.

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Outcomes:

  • It is proposed that through Jersey’s Public-Private Partnership (PPP), Jersey Financial Intelligence Network (JFIN), major banks can be alerted to help identify transactions related to the crowd funding platforms. When links from these platforms have been identified to a bank accounts for withdrawals, the banks can verify the account holders and conduct due diligence to ensure legitimacy. This can help assess whether the page’s stated purpose aligns with the banking behaviour.
  • Banks can enhance monitoring of accounts opened by non-residents during geopolitical conflicts, such as the attack on Israel. Additionally, this can extend to reviews of accounts opened in the months before a significant conflict breaks out, especially when there is no clear rationale for doing so to prevent the accounts from being used for illicit purposes.
  • Social media platforms and page group admins were alerted and requested to remove the relevant postings.
  • The ease of opening an offshore account due to holding an existing account in another jurisdiction is being addressed by local banks. This will most likely result in stricter Know Your Client (KYC) requirements and more clarification surrounding the purpose of the account.
  • The FIU were advised that the global relationship would be reviewed and exited if appropriate.

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FIU Comment:

  • During major conflict or geopolitical tensions, the public should be encouraged to report pages soliciting donations, as law enforcement may not always be aware of them.
  • The FIU, with Jersey Financial Service Commission (JFSC) involvement, to undertake a research project with local Non-Profit Organisations (NPOs) to identify how they may be exploited to raise and move funds in the same context.
  • Coordination with international partners to protect Jersey from being a conduit for TF.
  • The FIU undertook research to identify whether other IFCs had experienced similar targeting by bad actors.
  • The rapid transfer of funds out of the Jersey bank account is assessed to be a likely attempt to move small donations through different accounts and financial institutions to obfuscate the funds and make it more challenging for competent authorities to trace and identify the end destination.
  • Identifying IP addresses linked to crypto wallets hosted in Jersey may be a central tool in tackling illicit finance associated with crypto assets.
  • The FIU regularly refer to the D2 list issued by the JFSC which provides details of countries, territories and areas that have been identified by reliable and independent sources as presenting a higher risk of terrorist financing for the purpose of assisting with analysis and grading of reports.