The money trail.

 

A few weeks ago, an article in the Economist headed by the title - “The sinews of war” posited that Israel’s declared goal of destroying Hamas for good requires its financial base to be dismantled, too. Very little of this sits in Gaza at all. Instead, it is overseas in friendly countries. Furnished with money-launderers, mining companies and much else, Hamas’s financial empire is reckoned to bring in more than $1bn a year. Having been painstakingly crafted to avoid Western sanctions, it may be out of reach for Israel and its allies.

The Times of Israel quoted various foreign news outlets supporting similar assessments.

Notwithstanding that, Globes Israel business news reported that the Israel Money Laundering and Terror Financing Prohibition Authority claims it is beginning to “thwart Hamas on the financial battlefield.”

Two weeks into the Gaza war, the Israel Money Laundering and Terror Financing Prohibition Authority (IMPA) received secret intelligence information from two European countries that warned: "A large, well-known organisation is raising funds for Hamas through posts on social networks, and fintech company platforms outside Israel, under the guise of donations to Gaza residents." The information included the name of the organisation, its fundraising methods, and the identity of the entities behind it. Their concern was that, within days, the millions of dollars raised would go directly to the military arm of Hamas. In a swift joint international action, at IMPA’s request, one of the European countries blocked the organisation’s money pipeline by immediately freezing its financial activities.

"We are talking about a matter of minutes here. From the moment the authorities in Europe received the information, and we requested the money be blocked, with no court orders or delay, they blocked the transfer of millions of dollars to one of the most active organisations, and from it to Hamas. This is a real-time deterrence," reveals IMPA director general Adv. Ilit Ostrovitch-Levi. "And then there was a domino effect. Following this blocking, more countries began to look around, and blocked funds intended for terror. All this information, which is now shared at an international level, leads to the closing of more and more Hamas funding pipelines, in real time. With worldwide cooperation, Israel’s security and enforcement authorities are thwarting the transfer of millions of dollars earmarked for terrorism, every day."

Headed by Ostrovitch-Levi since May 2022, IMPA is an intelligence body that conducts the most complex of international economic investigations, and fights terror financing routinely. On October 7, Ostrovitch-Levi received a painful reminder of the vital importance of her work. "Already on that Saturday night, with Israeli under heavy rocket fire, we talked about preparing ourselves for the campaign we’re now entering, the fight against terror financing channels. Dozens of our staff have been called up to reserve duty, mostly managers working regularly in the fight against terror financing."

Since then, most of IMPA’s work has focused on identifying and blocking the terror money pipelines. "We work very reactively - we see a fundraising campaign, try to deter it, and stop it from happening again. There are no breaks to relax a bit, because they are constantly active. It’s a daily struggle. Our analysts have been sitting on the social networks from day two of the war, manually monitoring visible sources of information on these networks to locate fundraising campaigns for terrorist organisations operating in Gaza."

Three days after the war began, IMPA also issued a call to all global regulated entities for increased vigilance towards terrorism financing campaigns in response to the ongoing war and state of emergency, and to report all activities that raise suspicion of terror support and terror financing, in an effective and immediate manner.

"Overnight, we started receiving hundreds of reports about unusual activity by customers of financial institutions in the State of Israel," she says. Before October 7, IMPA received about 100 reports a day dealing with terror financing. That number jumped to about 1,000. "There is a 900% increase in reports on terror financing, and we don't waste time, everything happens very, very quickly. As we receive the information, we simultaneously pass it on to the operational professionals who locate the money pipelines, and block them. Some information will not necessarily lead to terror financing, but we don’t have time to waste. Bank CEOs call and draw our attention to the information they convey to us that warrants special attention."

The network to block terror financing funds includes many entities, including private citizens. "The world's financial intelligence authorities are now at the heart of this struggle, and we’re working together to thwart the financing channels that we’ve located. In addition, we’ve been approached by many experts from the private sector; people with intelligence experience because they’ve worked in these organisations, or have high-tech experience. Israeli entrepreneurs in Silicon Valley have contacted us; they write code, search for information, and give us lots of information. We aggregate and examine everything."

IMPA is charged with rooting out the sources of funding for terrorism, working together with Israel’s National Bureau for Counter Terror Financing (NBCTF) in the Ministry of Defence, which is the coordinating body of all activities to thwart terror financing, the Shin Bet, Military Intelligence Directorate (AMAN), and all other relevant intelligence and security agencies. "The most significant way to finance terrorism is to finance countries, not fundraising campaigns. These have intensified greatly over the last month, but the core of the budget - for Hamas, Hezbollah, the Houthis, and the Palestinian Islamic Jihad is Iran, in particular the Quds Force (the special forces of the IRGC, Iran's Islamic Revolutionary Guard Corps). Hamas has all kinds of additional sources of self-financing, including businesses, associations, investments, and all kinds of arrangements they’ve tried to set up over the years. They need state funding, and without Iran they can’t exist."

“In the past, Qatar transferred suitcases of cash to Gaza through Israel. Everyone knows this. This money allegedly went to pay salaries and civilian needs (education, health, infrastructure), and therefore Israel transferred it, so it’s incorrect to say that it all went to fund terrorism."

How have these billions reached civilians and Hamas over the years? There are quite a few methods, including cryptocurrencies and trade. But the main and easiest method for money transfer to Gaza is hawala.

Ostrovitch-Levi explains, "Most of the money does not reach Gaza physically through the border crossings, but via hawala, a financial channel that is based on trust and connections, and enables the transfer and exchange of funds between countries, without the cash physically passing through them. It’s a channel for transferring the funds raised in other countries. In Gaza there are all sorts of wealthy individuals who can transfer large amounts in cash to Hamas upon receiving a request from entities abroad."………

"Money changers in places all over the world, let's say Turkey, receive money, and inform the hawaladars (money changers) in Gaza who transfer the money on their behalf. When a customer comes to a hawaladar in Turkey and asks to transfer money to Gaza, he does not physically transfer money, but settles accounts internally with money changers in Gaza and the West Bank. The funds are not actually transferred physically. Occasionally, or when the amount of the debt reaches a predetermined ceiling, a transfer is made between the money changers to reset the outstanding debt."

"Transfers are made between two ‘exchangers,’ and don’t include the identity of the beneficiaries, or the persons who gave the money. They don’t know what the transactions were, they only know there are debts to offset. We are in a constant battle against this phenomenon. In recent years, Israeli authorities have designated several currency service providers in Gaza as conduits facilitating the transfer of tens of millions of dollars a year to terrorist organisations in Gaza."

Another way to transfer money is trade. Transferring goods, or inflating their value. For example, only days ago, containers of goods worth hundreds of thousands of shekels were seized at Ashdod Port, which were destined for Hamas merchants in Nablus and other cities, with the proceeds intended to go on to finance Hamas operations. Another example is the 23 tons of chocolate bars that were seized in August 2021 in a joint operation by the NBCTF, AMAN, and the Tax Authority at the Nitzana Border Crossing between Israel and Egypt. It was suspected that the snack bars, destined for Gaza, were purchased with terror financing funds, with the proceeds from their sales earmarked for Hamas.

Another affair that was uncovered, combined trade and hawala. Hamas funds originating in Iran, which were transferred in cash to money changers in Turkey for transfer to Gaza. At the same time Hamed al-Khachari, a Gazan money changer who worked for Hamas, located Gazan merchants who imported goods from Turkish companies and owned payment on the goods. They paid cash to Khachari, who transferred the money to Hamas in Gaza. Meanwhile, the money changers in Turkey received funds from Hamas abroad that were used to pay the Turkish companies.

Although it has been almost impossible to transfer money and goods to Gaza since October 7, with hawala shuttered, and no trade, Hamas continues to raise funds. "The situation in Gaza is known, and nothing can be brought in, but fundraising activity continues in the West Bank. It’s also possible to make bank transfers to the West Bank, and the fundraising activity hasn't stopped, because while the fighting is going on, they’re continuing to fill their reserves for ‘the day after’ [the war]. We realise they’re raising funds for their continued operations. Hamas is taking advantage of the current sympathy for the Gazans’ situation, and is using online platforms, both of organisations whose business is crowdfunding, and also through the creation of fictitious projects to raise funds: throw-pillows, jewellery and whatnot, and more."

All this happens openly, for all to see, in Europe, and other places around the world. "Hamas and Islamic Jihad carry out recruitment operations under the guise of humanitarian aid campaigns, and use Telegram, Twitter, Facebook, Instagram and TikTok to disseminate their announcements. The façade is always supporting humanitarian goals, but in practice it's about channels for funding individuals and entities connected directly to Hamas or Islamic Jihad."

However, IMPA’s goal, Ostrovitch-Levi explains, is not only to stop the individual raising of funds for terror financing, but the entire interrelated chain, from the fund-raiser to the transferrer, and on through to the recipient. "We have the ability to build the intelligence scenario, synchronise all the sources of information received, and delineate the money trail from abroad to Hamas. We’re interested not only in who is running the campaign, the association or entity, but where the money is coming from, and where it’s going to. We need to stop all of the factors in this network." Ilit Ostrovitch-Levi concluded. 

I began by quoting the authors of the article in the Economist who claimed that ‘taking down’ Hamas’s financial empire may be out of reach for Israel and its allies. I continued by citing a report in Globes Israel business news that Israel is beginning to “thwart Hamas on the financial battlefield.”

Let’s hope that we will win this battle of wits.

 

Take care.

 

Beni,

11^th of January, 2024.