FinCEN Is Analyzing $165M in Transactions That May Tie Crypto and Hamas, Senior Official Says

FinCEN, the bureau of the U.S. Treasury department responsible for combatting terrorism financing, is currently analyzing $165 million worth of transactions that may be linked to Hamas and cryptocurrency. According to a letter from Deputy Treasury Secretary Adewale Adeyemo, financial institutions have reported these potential crypto transactions between January 2020 and October 2023. Adeyemo’s letter, addressed to the leaders of the Senate Banking and House Financial Services Committees, seeks their support in passing legislation to expand the Treasury Department’s oversight powers over crypto transactions.

However, the letter also highlights that the $165 million figure may not solely be tied to crypto or Hamas. Adeyemo explains that a financial institution could have attributed the full value of a customer’s transactions, including both fiat and digital asset activity, to Hamas, even though only a portion of the reported activity may have been related to the terror group.

FinCEN’s analysis revealed that over 200 cryptocurrency addresses may have been involved in these transactions. The Treasury Department is currently conducting ongoing analysis to understand the potential threats posed by cryptocurrencies and crypto services.

Adeyemo expressed concern that as traditional financial access for groups like Hamas is restricted, they may increasingly turn to virtual assets. However, he also noted that the use of crypto by terrorists remains limited, which aligns with previous statements from Treasury officials.

This news comes in the context of lawmakers scrutinizing the role crypto may have played in Hamas’ attack on Israel last October, leading to a war in Gaza and a significant loss of life. In response to allegations that crypto was a tool utilized by the terror group, a group of lawmakers wrote an open letter urging the Treasury Department to investigate the extent of Hamas’ crypto usage.

The Treasury Department subsequently requested greater authority to pursue illicit crypto activity, especially overseas. Adeyemo referenced this request in his letter, stating that the analysis of the potential Hamas-related transactions informed legislative proposals that aim to modernize Treasury’s tools. These proposals could potentially expand coverage of new entities in the virtual asset ecosystem and grant the Office of Foreign Assets Control the authority to impose secondary sanctions on virtual asset firms conducting business with sanctioned entities.