LENS Essay Series: “Financial Jihad: Combating the Use of Virtual Assets in Terrorist Financing”
Lawfire® readers who have been following the war between Hamas and Israel may have read media reports about how cryptocurrency has played a role in financing Hamas (as well as the Palestinian Islamic Jihad and Hezbollah).
According to the Wall Street Journal: Hamas’ lightning strike on Israel “has raised the question how the group financed the surprise operation. One answer: cryptocurrency.” It adds:
“During the year leading up to the attacks, three militant groups—Hamas, Palestinian Islamic Jihad and their Lebanese ally Hezbollah—received large amounts of funds through crypto, according to a review of Israeli government seizure orders and blockchain analytics reports.”
Hamas has accumulated considerable financial resources. France 24 reports:
“Hamas which Forbes magazine ranked in 2014 as “one of the richest terrorist groups in the world”, has an estimated annual budget of nearly $1 billion. Most of the money comes from “expatriates or private donors in the Gulf region”, points out German news channel Deutsche Welle.“
What can the U.S. and other countries do about the problem of terrorist financing? The latest installment of the LENS Essay Series has some answers for you.
In her essay, “Financial Jihad: Combating the Use of Virtual Assets in Terrorist Financing” Duke Law 3L Madison Cash does a terrific job at clarifying the issues and–even more importantly–offers ideas as to how to address this complicated area. Here’s the abstract:
Cryptocurrency has played an increasingly important role in the world of terrorist financing, inside the U.S. and abroad. Many foreign terrorist organizations use a combination of cryptocurrency and other informal money transfer channels to build an aura of anonymity, in turn incentivizing and protecting donations. Cryptocurrency is not as anonymous as it seems, and law enforcement can and has traced accounts and payments funneled through virtual asset transfer systems. However, cryptocurrency, in conjunction with informal systems of money transfer such as the hawala system, pose a particular threat to the effective investigation and prosecution of terrorist financing. These informal systems are often most powerful in areas controlled by uncooperative foreign powers. To address this gap, the author proposes that the U.S. should encourage effective multilateral collaboration within a unified regulatory scheme. In addition, it ought to aggressively penalize those who teach terrorist groups how to use cryptocurrency to raise funds as well as those intermediaries who facilitate illicit cryptocurrency transfers.
Be sure to read Maddie’s full essay found here.
About the author:
Madison Cash (J.D. 2024) is a 3L at Duke University School of Law. Growing up, she moved often as a military kid, but now calls Houston, Texas home. She graduated from Wheaton College summa cum laude, where she double majored in Spanish and English Literature. During her 1L summer, Madison was a Legal Intern for the Navy Judge Advocate General’s Corps at the Commander, Navy Region Mid-Atlantic in Norfolk, Virginia. During her 2L summer, Madison worked as a Summer Associate at Hogan Lovells in Washington, D.C. After graduation and bar passage, Madison will be returning to Hogan Lovells and subsequently clerking for Judge David Novak in the Eastern District of Virginia.
At Duke, Madison serves as the Co-President for the National Security Law Society and is the Notes Editor for the Duke Law Journal of Comparative & International Law. Her note, “Reversing CFIUS: Analyzing the International and Constitutional Implications of the Revised National Critical Capabilities Defense Act,” was published in the Spring of 2023. She is also involved with the Duke Law and Technology Review, the Moot Court Board, the LENS Center, and the Legal Analysis, Research, and Writing Program.
Remember what we like to say on Lawfire®: gather the facts, examine the law, evaluate the arguments – and then decide for yourself!
