Cash Flow to Hamas Is More Restricted, Deeper Underground

CHICAGO, Feb. 18 -- Hamas leaders who took charge of the Palestinian parliament Saturday are searching for cash, well aware they can expect no financial support from the U.S. government. They also know that aggressive detective work by federal investigators has clipped the pipeline that once carried millions in private donations collected in the United States.

Before the Bush administration intensified its crackdown on terrorist financing after the Sept. 11, 2001, attacks, mosques and Muslim charities openly raised money for the Islamic Resistance Movement, also known as Hamas, that mixes Palestinian community work with anti-Israeli suicide attacks. After Hamas was outlawed, investigators say, one Texas charity funneled $12.4 million overseas to Hamas.

But the indictment of alleged Hamas money men in Chicago and Dallas, combined with the FBI questioning of private contributors, has chilled donors, slowed collections and forced fundraising underground, according to U.S. authorities, terrorism financing experts and members of Chicago Muslim organizations.

Specialists who track the money say Hamas fundraisers are adapting by using hard-to-trace methods for moving cash overseas, including stored-value cards, Internet bank accounts and old-fashioned couriers. Money is also sometimes wired to European and Middle Eastern countries where U.S. authorities say they often get little help in following the trail.

By all accounts, the volume of money going abroad has been reduced, although government officials acknowledge that Hamas agents remain active. As one federal source put it, "We're aware of the Hamas presence here, and it has an organizational structure."

Bruce Hoffman, a Rand Corp. counterterrorism expert, noted: "We have been successful in limiting their activities in the past, but nobody should be under any illusion. Not least because what we've done has been so effective, they're adjusting and adapting in response."

U.S. authorities are preparing for a new Hamas marketing pitch after the Jan. 25 election. The victory gave Hamas a fresh element of democratic legitimacy to accompany a newfound need to help the cash-strapped Palestinian Authority pay for salaries, public works and social services.

Hamas draws money from dozens of countries, most notably Saudi Arabia. Israeli Brig. Gen. Michael Herzog said Hamas will have access to more money than ever as the Palestinian government, but will also face greater needs.

"I'm sure they will maintain an independent military just in case, and they will have to fund it," said Herzog, a visiting military fellow at the Washington Institute for Near East Policy. "They will still need their own independent sources of funding."

The Bush administration's approach to Hamas in this country has not changed. The group remains a designated terrorist organization, and U.S. law prohibits contributions of money or material support. One senior official summed up the long-standing approach: "You stop the money, you stop the bad guys."

The FBI investigation of Muslim charities and other fundraising activities linked to Hamas began in the early 1990s but gained momentum after Sept. 11. The most prominent early target was the Holy Land Foundation for Relief and Development, based in Richardson, Tex.

Created in 1988, the year after Hamas was founded, Holy Land became the nation's largest Muslim charity, collecting $57 million between 1992 and 2001, according to a federal indictment unsealed in 2004. It was a time when advocates openly appealed for support for Hamas, often doing little to disguise the dual tracks of militance and community work.