Italian authorities uncover Hamas-linked Charity

Italian police on Saturday arrested 9 individuals accused of raising more than EUR7M under the pretence of humanitarian aid for Gaza. According to the report, those funds were being funnelled to entities controlled or directly licked to Hamas.

These developments once again highlighted a long-standing and uncomfortable reality: charitable organisations can be exploited to funnel funds to terrorist groups, including Hamas, even when those organisations appear legitimate, registered, and regulated.

Charities operate in a space where trust is assumed, scrutiny is uncomfortable, and verification is sometimes treated as optional. That combination creates opportunity - not for legitimate aid delivery, but for misuse.

This is not an isolated incident

The Italian case sits alongside multiple historical enforcement actions in the space. In the United States, OFAC identified earlier this year overseas charity networks being used to fund Hamas and the PFLP. In those cases, OFAC found that charitable status was used to mask the movement of funds, often under the guise of humanitarian or social assistance.

Across jurisdictions, the mechanics are strikingly similar:

• Donations raised in good faith

• Funds routed through charities or affiliated entities

• Limited visibility into end use

• Control exercised by a small group of individuals, despite formal governance structures

Placing too much emphasis on form and not substance can ignore clear financial crime indicators.

Why charities remain vulnerable

Unlike commercial entities, charities often:

• Have no shareholders, but still concentrate control

• Operate across borders with limited local oversight

• Rely on intermediaries and partner organisations

• Move funds quickly into high-risk or conflict regions

Crucially, the absence of ownership does not mean the absence of control. Trustees, founders, executives, or external actors can still exercise decisive influence over how money flows.

The Italian case is not an outlier

What makes the Italian case noteworthy is not novelty, but familiarity. The same indicators recur:

• Opaque governance structures

• Limited visibility into end-use of funds

• Weak ongoing monitoring once onboarding is complete

Time and again, investigations show that registration with a charity regulator, while necessary, is not sufficient to manage AML and terrorist financing risk.

What regulators expect now

Regulators are not asking firms to de-risk charities wholesale. They are asking for proportionate, intelligence-led controls that reflect how money actually moves.

That means:

• Understanding control, not just legal form

• Screening across full networks, not single entities

• Treating charity onboarding as dynamic, not static

• Maintaining audit-ready rationale for risk acceptance

Good intentions are not a defence in an AML review.

The takeaway for compliance teams

Charities do vital work, and financial institutions play a role in enabling that work. But recent events are a reminder that trust cannot replace verification.

The sector’s social value does not eliminate financial crime risk. In some cases, it amplifies it.

To help with analysing the risks of Charities checkout Steward’s Charity onboarding checklist below:

Charities & AML Guide: What Compliance Teams Should Check

🚩 Control & Governance

• Identify trustees, directors, founders, and senior executives

• Determine who has effective control over funds and strategy

• Watch for figurehead boards or concentrated decision-making

• Read the foundation/entities’ constitutional documentation

🌍 Geographic Exposure

• Are the operations, beneficiaries, or partners in conflict or high-risk regions?

• Are there rapid changes happening within those operating geographies?

• Are you placing reliance on local partners with limited oversight?

💸 Source of Funds

• Breakdown the donor types (public, private, foreign, state-linked)

• Look for concentration risk (i.e. funding from a small number of donors)

• Are donations routed via intermediaries or third parties?

🔁 Use of Funds

• Check for alignment between stated charitable purpose and actual spending

• Does the Charter focus on vague categories (“aid”, “support”, “humanitarian assistance”)?

• Look for large cash disbursements or pass-through behaviour

📰 Screening Across the Network

Carry out screening (PEP/Sanctions/Adverse Media) across:

• Trustees, senior staff, major donors

• Partner organisations and affiliates

• Re-screening on a periodic basis

⏱️ Change Triggers

Look out for:

• Changes in leadership or governance

• Sudden spikes in donations or outflows

• Increased activity following geopolitical events

🔄 Ongoing Monitoring

AML isn’t static, so it is important that you carry out:

• Periodic reviews, not one-off onboarding

• Trigger-based reassessments

• Updated risk scoring over time

🧾 Auditability

To ensure your systems & records are up-to-speed, don’t forget to have:

• Clear rationale for onboarding decisions

• Documented risk assessment and controls

• Evidence that risk is actively managed

Happy onboarding!