Israel says Hamas using imported goods to launder money

An Israeli news report claims Hamas is funneling funds into the Palestinian territories by importing goods and reselling them for a profit.

al-monitor A truck carrying goods to Palestinians arrives at Kerem Shalom crossing in the southern Gaza Strip, Aug. 15, 2018.  Photo by SAID KHATIB/AFP/Getty Images.

Apr 24, 2019

Hamas continues to seek innovative ways to loosen the financial noose around its neck, put in place by Israel and the Palestinian Authority (PA).

Over the years, Hamas’ ongoing financial crisis has only worsened, as the movement has found itself forced to shut down media institutions and executive offices and make cuts to its economic, military and social departments. Hamas is still struggling to pay the wages of its employees in the Gaza Strip. On April 14, after a four-month delay, the movement paid 40% of the employees' December wages.

An April 11 report by Israel’s Channel 12 has exposed a method Hamas allegedly uses to smuggle funds between the Gaza Strip, the West Bank and abroad. The report claims Hamas imports goods from abroad and resells them in the West Bank and the Gaza Strip, keeping all the profits.

Reporter Ohad Hamo said he was tipped off by Palestinian and Israeli security officials that Israel detected over the past few weeks 10 containers carrying goods imported from China, Turkey and the Persian Gulf. The goods include clothing and toys, but officials suspect many other products are involved. Foreign traders and companies close to Hamas buy goods from those countries and import them to Hamas inside the Palestinian territories. When the goods are sold in Palestinian markets, the money is transferred to Hamas’ own treasury in Gaza and the West Bank. No specific names for the companies or traders involved have been provided.

A Hamas financial official told Al-Monitor on condition of anonymity, “Hamas has been living under a financial blockade for 13 years. The movement has been coping with the restrictions imposed by Israel and the PA, as it seeks to bring money into Gaza and the West Bank using its own methods.”

He added, “Israel and the PA are the reason for the emergence of money-laundering means, which they deem illegal. However, Israel and the PA can stop this phenomenon by allowing traders to open bank accounts and receive money transfers through money exchange offices.”

Both Israel and the PA enforce various forms of security and financial persecution to dry up Hamas' financial resources.

Osama Nofal, director general of the Planning and Policy Department at the Gaza Ministry of Economy, told Al-Monitor the Palestinian Monetary Authority (PMA) has "imposed financial and security measures, in coordination with Israel and the United States, to track traders who are requesting banking accreditation for the purpose of importing goods."

PMA Gov. Azzam al Shawwa visited the United States in January where he met with US officials to discuss ways of combatting money laundering and terrorist financing. The Palestinian government had approved a national strategy on the problems in November.

Abdul Hadi Ali, a Gaza-based trader, told Al-Monitor that from his point of view, “The PA is making sure to excessively audit traders under the pretext of preventing funds from getting into Hamas’ hands.”

He added, “We are importing and exporting goods without Hamas’ involvement. The PMA, however, has written up blacklists that include several traders [with accounts] in local Palestinian banks and money exchange offices in Gaza and the West Bank, which has deeply impaired us.”

In light of the financial crisis, Izz ad-Din al-Qassam Brigades, Hamas’ military wing, announced Jan. 31 that it would start accepting donations via Bitcoin. In the past, Hamas allegedly has smuggled money into the West Bank through shell companies and fictional bank accounts, and used mobile phone applications to make bank transfers.

Samir Abdullah, former labor and planning minister in Ramallah and senior researcher at the Palestine Economic Policy Research Institute - MAS, told Al-Monitor, “The PA enforces procedures through the PMA on all Palestinian traders and businessmen, which include auditing, monitoring and ensuring transparency as per the internationally approved systems.”

The PA works to ensure that funds don’t reach illegal parties and local and foreign transactions go through Palestinian banks. "Any sums over $10,000 that are collected through Palestinian banks as part of business deals have to be tracked," Abdullah added.

Hamas uses secret means of funneling funds to avoid the PA’s standard banking frameworks, as the group’s leaders have been blacklisted at Palestinian banks. Nonetheless, the PA’s procedures against the traders and importers accused of working for Hamas have undermined the group's already-scarce resources.

Mohammed Abu Jayab, editor-in-chief at the Gaza-based Al-Eqtisadiah newspaper, revealed to Al-Monitor that “dozens of Palestinian companies and hundreds of traders buy goods worth millions of dollars before selling those goods inside Palestinian [territories], which is how Hamas obtains funds.”

Abu Jayab added, “The PA and Israel took notice and shut down some companies and barred some traders from foreign activities. They also enforced new financial requirements, such as requiring a banking certificate to transfer money. Anyone who raises suspicions would have their goods confiscated, be banned from any commercial deals and be banned from leaving Gaza.”

Since 2016, Israel has charged dozens of Palestinian traders who travel outside Gaza through the Erez crossing with transferring money to Hamas. Israel has also revoked commercial licenses and shut down dozens of Palestinian commercial companies.

Though Hamas apparently found a way through global trade routes to overcome the formal financial restrictions inside Palestinian lands, the group is bound to find a new one now that Israel and the PA have detected the latest scheme.

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