Why it's difficult to stop Hamas' funding, despite the U.S.'s increased efforts.

• The U.S. is intensifying its efforts to stop financing Hamas following their terrorist attacks against Israel.
• The Hamas funding network is a complex and challenging task to dismantle due to its vastness and intricacy.
• CNBC interviewed Brian Nelson, the top Treasury official, about the U.S.'s actions.

The US is actively working to stop funding for Palestinian militant group Hamas following the October 7 terrorist attacks that resulted in the deaths of 1,400 Israelis and the capture of over 200 Israelis.

On Wednesday, the U.S. Treasury Department's under secretary for terrorism and financial intelligence met with officials in Qatar while Israel carried out airstrikes on the Gaza Strip.

Brian Nelson, the official, stated in a phone interview with CNBC that the U.S. is ready to act independently, but when it collaborates with regional partners, it has a higher chance of achieving success at a faster pace with greater efficiency.

Nelson conveyed a similar message to officials in Saudi Arabia, whom he met on Tuesday. Although he remained tight-lipped about specific individuals his office may target next, the Treasury Department has given hints that further action is imminent.

The Hamas funding network is a complex and challenging task to dismantle due to its vastness and intricacy.

The Treasury's Office of Foreign Assets Control (OFAC) imposed sanctions on 10 institutions funding Hamas a week ago, following an investigation that had been ongoing for years. The investigation accelerated after the recent attacks in the region.

Nelson emphasized the urgency of acting to prevent inflows to Hamas from across the globe, which have increased due to previous Hamas terror attacks, as stated by the U.S.

Hamas’ large funding network

Hamas' fundraising network is extensive, with the group receiving a significant portion of its funds through charitable organizations that also legitimately channel aid to help Gaza's civilians and civil projects.

Juan Zarate, the first ever assistant secretary of the Treasury Department responsible for tracking and eliminating financing for terrorists, stated that making the distinction is often challenging.

In the aftermath of the Sept. 11, 2001, terrorist attacks on the U.S., George W. Bush appointed Zarate. Currently, Zarate serves as a co-managing partner at K2 Strategies, where he provides counsel to clients, including governments in the Middle East, on a range of topics, including financial compliance and cybersecurity.

Hamas has been able to operate under a cloak of legitimacy in some circles, including Gaza, which has put some governments, including the U.S., in a position where there was less of an aggressive appetite to go after them.

“For now, that has changed,” he said.

Zarate stated that the U.S. not pursuing Hamas was due to a lack of resources, priorities, and the belief that the Israeli government had the situation under control.

In addition to receiving donations from charitable organizations, Hamas also generates revenue by imposing taxes on locally produced and imported goods in Gaza.

Hamas also receives significant funding from Iran, as per officials from the Treasury and State departments.

Supporters of Israel have been calling on the U.S. to intensify its monitoring and interception of Iranian oil exports since October 7th, even though previous administrations have permitted these exports to pass through, in violation of sanctions. China has been a significant recipient of these oil exports.

The American and global economies may suffer if the U.S. government stops providing Iran with oil, as it is concerned that removing it from the market would increase oil prices.

Where the banking system comes in

When an individual or institution is placed on OFAC's designated terror funding list, financial institutions worldwide, including those in the U.S., receive a flag. If a transaction is made in dollars, it passes through an American bank.

Gary Osen, an attorney who has previously sued terror financiers for aiding Hamas, including the Arab Bank in Jordan, confirms that the additions to the list are made in real time.

An alert is triggered by the banking system, prompting a manual review.

Osen stated that the system has not done enough to prevent money from reaching Hamas, according to him. He mentioned several organizations, including the Union of Good, which the U.S. Treasury Department designated as a terrorist fundraiser in 2008. The U.S. at that time described the Union of Good as an organization created by Hamas leadership to transfer funds to the terrorist organization.

In a 2019 lawsuit filed in U.S. Federal Court by Osen on behalf of the estate of an American man killed by Hamas in the West Bank, it was alleged that the Turkish non-profit IHH Humanitarian Relief Foundation has links to Hamas. The lawsuit stated that IHH has conducted much of its financial business with Hamas through the Union of Good. However, the lawsuit was dismissed.

The bill, which had bipartisan U.S. congressional support and 23 co-sponsors from both parties, accused IHH of being a member of the “Union of Good” after its participation in the 2010 flotilla to Gaza. Despite this, the bill stalled.

The National Bureau of Counter Terrorism Financing in Israel has designated IHH as a direct sponsor of Hamas.

IHH did not respond to CNBC's requests for comment before the publication of this article. However, six weeks later, an attorney for IHH denied all accusations and stated that the foundation works to protect the basic rights and freedoms of people affected by poverty, war, natural disasters, and other calamities. Regarding Israel's allegations that IHH supports Hamas through fundraising, the letter stated that these are unfounded decisions made by Israel based on political preferences.

Osen explained that the U.S. has not designated IHH as a supporter of terrorism due to diplomatic reasons, such as the organization's close ties to the Turkish government, a NATO ally. Governments often have to balance various considerations and reasons for not taking action.

The IHH Humanitarian Relief Foundation and the Union of Good were added to the story with more information.