Since the Oct. 7 attack, donations to charities linked to Hamas have increased by 70%, Israeli officials claim.

• Since the Oct. 7 attack, there has been a 70% increase in donations to Hamas-linked charities in Israel, according to current and former officials.
• The global financial systems are increasingly being utilized in the fight against Hamas.
• Stopping the charities is difficult, as many quickly change names and methods.

Since the deadly Oct. 7 attack on Israel, there has been a substantial rise in donations to Hamas-linked charities, as revealed by financial investigators in Israel, according to current and former Israeli officials who requested anonymity to discuss sensitive national security information.

According to Uzi Shaya, a former high-ranking officer in Mossad, Israel's intelligence service, there was a 70% rise in funds given to charities linked to Hamas.

According to Israeli Defense and Foreign Ministry officials, the increase in revenue over the past seven weeks is approximately $100 million.

While CNBC could not verify the exact amount of funds going to Hamas-linked charities, former and current U.S. intelligence officials stated that Israel has the ability to monitor this information.

The halt of Israel's retaliatory campaign has stopped commerce in the Hamas-controlled Gaza Strip, leaving international aid as the only source of sustenance for the region.

Israel is fighting on a fourth front, which is the international financial system, in addition to its battles on land, sea, and air.

Monitoring and stopping the inflows of money to Hamas is challenging due to the global and fluid nature of the charity groups involved, as well as their tendency to change their names.

A Foreign Ministry official stated to CNBC that "we do not wish to categorize charities and withdraw funding for legitimate activities."

At Mossad, Shaya was tasked with halting the financial support to groups including Hamas, Islamic Jihad, and Hezbollah in Lebanon.

After the October attacks, he returned to help the Israeli government, where he is now working to track down funds going to organizations that the U.S. and Israel classify as terrorist groups.

Hamas has received foreign funds from three primary sources: Iran, Hawala, and cryptocurrency, traditionally.

Money from Iran

Over the past four years, Iran has provided Hamas with between $70 million and $100 million annually in cash for military purposes, including weapons, communication systems, and other equipment, Israeli officials said. This money is believed to have funded many of the missiles and small arms used in the Oct. 7 attack.

Gaza's Hamas has diverted foreign aid intended for its citizens and used the funds to construct an extensive network of tunnels and bunkers, which has hindered the Israeli military's operations. It is believed that many of the hostages taken on Oct. 7 are being held captive within these tunnels.

Hawala

An alternative source of funding is the ancient Islamic money transfer system known as Hawala, which relies on trust rather than tangible assets. Similar to a system of IOUs, Hawala facilitates the transfer of money between parties without the need for Western-style banks.

Hamas in Gaza receives charitable money through Hawala, which is intended for humanitarian needs such as medical care, food, and education. However, Israel claims that a significant portion of this money is used by Hamas for military purposes.

The tracking of money within Gaza's closed-off systems is a difficult task for Israeli financial investigators due to its high fluidity and opacity.

An Israeli official acknowledged the dire situation in Gaza, stating, "People there are desperate and facing severe distress and difficulties." However, the challenge lies in ensuring that aid reaches its intended recipients, as past efforts have not been successful in this regard.

The National Bureau of Counter Terror Financing in Israel keeps a record of charitable organizations that it claims support Hamas' military. Several of these organizations highlight the Gaza crisis on their websites. One such organization pledges to match any donation, up to $1.5 million, made on November 28, which is known as "Giving Tuesday," a global charity awareness day.

Cryptocurrency

A third significant source of funding for Hamas is obtained through charitable and direct contributions via cryptocurrency, as stated by Shaya.

Officials in the U.S. and Israel have not fully grasped the extent of the transfers because Hamas and its donors do not use the same cryptocurrencies that Western officials typically monitor, such as bitcoin and ethereum. Instead, Hamas' donor network employs smaller cryptocurrencies.

Officials acknowledged that Hamas had become skilled in transferring funds through crypto, but they also stated that most of the blockchain companies they had interacted with were cooperative in halting financial transactions. They specifically commended Binance for adhering to their demands.

While some people believe that Binance deserves recognition, others do not. On November 21st, the US government announced a $4.3 billion settlement with Binance over accusations that included failing to implement programs to prevent and report suspicious transactions with terrorists, including Hamas' Al-Qassam Brigades, as stated in a Treasury Department release.

Hard lessons

Finding a way to provide economic opportunities for individual Gazans without simultaneously supporting Hamas militants has proven to be a challenging task for Israel.

Since 2007, when Hamas seized control of Gaza, the Israeli-Egyptian blockade has maintained an unemployment rate of approximately 47% for the territory's population of about 2 million people.

Israel has facilitated the transfer of hundreds of millions of dollars into Gaza through a direct avenue for Qatari financial assistance, as part of an effort to support the development of a functioning economy in the region.

Israel believed that without one, Hamas would be more likely to resort to violence. Israel also permitted 18,000 Gazans to enter Israel to work, hoping that a stable economy would calm Hamas. However, these hopes were dashed on Oct. 7.

"We erred in assuming that Hamas prioritized maintaining power and funding, overlooking the fact that we operate in a different cultural context," Shaya stated during a Zoom interview from his home in Israel.

What comes next

Since Israel's attack on Gaza forced Hamas' leaders into hiding, some funds have been redirected to Hamas in the West Bank, and additional funds have been held up in various accounts worldwide.

Despite Iranian funding drying up, Iran's leaders are waiting to see what happens in Gaza before committing more money to Hamas.

Many financial leaders in the West have sympathized with Israel's request to cut funding for Hamas and have taken action on their own, including the Treasury Department, which has recently imposed sanctions on several Hamas-linked organizations.

Still, Shaya said there is more the West can do.

To make a bigger statement, the U.S. and Europeans should threaten to cut correspondent banks, particularly those in Turkey, Qatar, and Malaysia, from U.S. banks, according to him.

“That kind of pressure would make a real and immediate difference.”

Gaza will likely be rebuilt after the fighting ends, but it will require billions of dollars in international aid, according to Israeli officials.

As the reconstruction process commenced, it was vital to allocate every dollar precisely to the reconstruction effort and prevent it from being used for rearming Hamas.