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Thank you. I am glad to join Attorney General Garland, Deputy Attorney General Monaco, and the rest of you here today. I applaud DOJ’s efforts. I won’t speak to its case, but to the separate investigation that Treasury’s Financial Crimes Enforcement Network undertook and the action we’ve taken.

The Department of the Treasury utilizes sanctions and the enforcement of our country’s anti-money laundering (AML) laws to protect our national security from illicit actors. From drug trafficking to combatting Russian aggression, the Treasury Department is committed to using all of the tools available to us to protect the American people.

We are proud of the public-private partnership we have formed with the financial sector to protect our national security. The vast majority of financial institutions work hand-in-hand with Treasury to keep our country and our communities safe.

TD Bank has done the exact opposite. For more than a decade, through deliberate actions—and inaction—TD Bank failed to meet its responsibilities.

TD Bank failed to implement or maintain a sufficient AML compliance program.

TD Bank failed to monitor trillions of dollars in transactions each year, including those the Bank knew posed a high-risk for abuse.

TD Bank failed to conduct adequate due diligence on high-risk customers, ignoring glaring red flags.

TD Bank failed to live up to its responsibilities to the American people.

I want to be clear, these systemic failures did not just create hypothetical vulnerabilities, but they resulted in actual, material harm to American citizens and communities. Time and again, unlike its peers, TD Bank prioritized growth and profit over complying with the law.

The bank enabled drug trafficking. In one example from FinCEN’s investigation, TD Bank facilitated over $400 million in transactions to launder money on behalf of criminals that were selling fentanyl and other deadly drugs that are poisoning our neighborhoods. In exchange for filing false or misleading reports on these transactions, TD Bank tellers accepted gift cards as bribes. In another example, TD Bank failed to detect the suspicious activities of one of its own employees who was accepting bribes in exchange for opening accounts in the name of shell companies.

That’s why today we are announcing the Financial Crimes Enforcement Network’s (FinCEN) $1.3 billion penalty on TD Bank, the largest civil monetary penalty against a bank in Treasury’s history.
In addition to a historic penalty, TD Bank has agreed to a four-year monitor to oversee its extensive remedial measures, including end-to-end review of its AML program. The bank will also be required to provide missing suspicious activity reports and, for the first time, FinCEN will require additional accountability and data governance reviews to provide recommendations for changing TD Bank’s culture of noncompliance.

Together, these requirements hold TD Bank accountable for its egregious and willful disregard of the law and the real harm it caused. This action demonstrates that we are committed to holding individuals and institutions accountable.

Let me end by thanking FinCEN, the IRS Criminal Investigation team, the Office of the Comptroller of the Currency, the Federal Reserve, and the Department of Justice for their collaboration. We look forward to continuing to work together to enforce our nation’s laws and protect our national security.

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I. Introduction

Good afternoon and thank you to the Federal Reserve Bank of Chicago for hosting this event and inviting me to speak.  Two years ago, Treasury published a report called The Future of Money and Payments in light of the changing landscape of money and payments.^[i]  Since then, we have continued to evaluate the potential benefits and risks of new technologies, both fast payment systems and tokenization, and new use cases, including cross-border payments initiatives.^[ii]  Today, I would like to focus on another aspect of the report – the recommendation to develop a federal regulatory framework for domestic payments.

In the past few years, we have seen rapid growth in digital payments and development of new payments infrastructure.  We have also seen growth in electronic money, or e-money, by nonbank payment service providers.  Relative to a payment app, e-money issuers may also hold customer balances outside of the traditional system of regulated banks and the central bank.  But an essential and necessary quality of money is trust in its value.  As I will explain, our current state-based regulatory framework has not kept pace with the growth in new kinds of money and payments, raising risks for the integrity of the payment systems and trust in money.  The state-level framework with varying requirements also raises barriers to entry, limiting competition and innovation.  

I will then propose the key foundational elements, including financial resources, risk management, and activities restrictions, that are needed in a modern regulatory framework for nonbank payment service providers, principally for issuers of e-money.  This framework builds on existing rules at the federal level for anti-money laundering and countering the financing of terrorism (or AML/CFT) and for consumer protection.  Of course, setting guidelines and regulations requires the consideration of many factors.  My hope today is to invite a broader discussion.  Through this discussion, we can work towards building a more comprehensive, consistent, and calibrated framework for regulating payments in the United States.

II. What’s changing?

Changes in payments are happening along several dimensions.

First, consumers are increasingly choosing to make payments electronically rather than with cash.^[iii]  This trend predates the COVID-19 pandemic but accelerated during the pandemic as consumers looked for more contactless means of payment.  In the United States, the share of cash payments fell from 31 percent to 16 percent between 2017 and 2023, while the share of payments with credit and debit cards rose from 49 percent to 62 percent.^[iv]  For payments made between individuals, the decline in the use of cash over this same period is more stark, falling from 75 percent to 42 percent, and the use of payment apps rose from 12 percent to 50 percent.^[v]  Relatedly, we are also seeing changes in the types of companies that offer payment services.  For example, nonbank payment service providers that offer user-friendly peer-to-peer payment apps have grown quickly in recent years. 

Second, the infrastructure for payments is advancing and raising the potential for a faster and more efficient payments system.  Adoption of real-time payment systems like FedNow and RTP in the U.S. is increasing, though still relatively limited.  Globally, 119 jurisdictions now have real-time payment systems, and some have seen widespread adoption.^[vi]  At the same time, tokenization based on distributed ledger technologies has emerged as a more ambitious and potentially more transformative alternative to legacy payment systems.  Broadly speaking, these projects aim to reduce frictions and delay in payment and settlement in legacy systems by storing information more centrally, such as on a shared ledger.  A wide range of tokenization projects are being pursued by both the public and private sector, including some joint efforts.^[vii] 

Third, new kinds of private money or money-like instruments are growing.  By “money,” I mean instruments that are designed to have a stable value and can be used for exchange.  In the U.S., like in most countries, money can be either public, like a Federal Reserve note, or privately issued, like a commercial bank deposit.  Funds held at nonbank payment service providers and stablecoins also serve some of the functions of money.  Like deposits, these balances are claims on the nonbank payment service provider represented in dollars, though not backed by the promise of one-to-one conversion to public money.^[viii]  I’ll refer to these nonbank payment service providers as “e-money issuers,” which, as I mentioned earlier, have been growing rapidly.^[ix] 

Relatedly, we have also seen growth in payment apps offered by nonbank firms.  Some may rely on bank partners or are linked to credit cards, but others may offer the ability to hold e-money balances.  Adoption of payment apps – including Venmo, Apple Pay, Google Pay, or CashApp – now rivals adoption of credit cards.  Today, more than three-quarters of U.S. adults have used a payment app.^[x]  While we know that customers are holding balances in e-money, we have relatively little insight into how much e-money is issued in aggregate or how long customers hold balances.^[xi]  We do know that consumers, particularly younger consumers, are increasingly turning to nonbank payment apps and fintechs as their primary banking service.^[xii]

Stablecoins are another new money-like instrument.  Like other forms of private money, a stablecoin typically claims it can be redeemed 1 for 1 in U.S. dollars.^[xiii]  Today, stablecoins are used mostly for payments and trading within the crypto ecosystem, but some proponents believe that stablecoins could become used more widely to pay for real goods and services, such as in situations where people may lack access to other stable assets.  There is some evidence that this is already happening.^[xiv]  Stablecoins have also grown rapidly in the last five years, and now have a market capitalization of $172 billion.^[xv]  And because stablecoins serve as a money substitute in some markets, including increasingly by illicit actors, this market capitalization supports a much larger transaction volume.  Some estimate that Tether supports $190 billion of transaction volume daily.^[xvi]

These changes to how we make payments may offer significant efficiency gains, advance financial equity, and even facilitate new kinds of transactions.^[xvii]  However, they may also present some risks if not appropriately managed, including risks to consumers and financial stability.  

I will turn next to the existing regulatory framework for certain intermediaries in payments – specifically, issuers of e-money – to make the case for a modernized federal framework.  

 

III. The Case for a Federal Payments Regulatory Framework

In the United States, banks are the dominant intermediaries that both issue money and make payments.  They are subject to a comprehensive prudential regulatory framework at the federal level, which reflects that banks also hold longer-term loans and securities, and have direct access to the Fed’s payment rails and federal backstops.^[xviii]

Other intermediaries, like e-money issuers, are overseen primarily at the state level as money transmitters.  The regulatory framework for money transmitters was developed for retail customers to send physical cash, often to family in a different state or country.  Money transmitters with this business model hold customer funds only for the short time period required to send them.  This meant that the customer’s exposure to the money transmitter was limited.  It also meant that money transmitters were prevented from engaging in significant maturity transformation. 

The current regulatory framework for e-money issuers reflects this limited business model.  First, money transmitters are subject to minimum net worth or surety bond requirements, but these financial requirements are generally not tied to the riskiness of their assets.  This means that an e-money issuer that processed 25 billion transactions in 2023 could meet minimum financial requirements with retained earnings of six one thousandths of one percent of its total assets.^[xix]  Money transmitters also may be subject to limits on what they can invest customer funds in.  These investment limits are what maintains 1 for 1 value with the dollar.  But even the most stringent of these requirements permit a relatively wide range of assets.^[xx] 

Second, the requirements vary widely between states.  Some states do not require any minimum financial resources.  Some place a cap on financial resources.^[xxi]  Some states limit investments to only certain kinds of assets.  Others place no restrictions on permissible investments.

Third, and partly as a result of the current state-based regulatory and supervisory framework, e-money issuers do not have direct access to federal payment rails like FedACH or FedNow.^[xxii]

The result is a growing segment of payments that has duplicative and overlapping regulations, but that doesn’t address important risks.  E-money issuers must navigate dozens of state-level licenses with varying requirements, increasing compliance costs and raising barriers to entry.  But there are some types of risks that are difficult for a state regulator to address because they originate outside that state’s borders, create stress in other parts of the financial system, or require coordinated intervention in crisis.  Our conversations with stakeholders highlight both kinds of concerns.  The existing regulatory patchwork is burdensome and inefficient, and at the same time does not adequately address risks to consumers and the financial system or promote competition and innovation by facilitating access to real-time payment systems.

Recognizing these concerns, state regulators have taken steps to improve coordination in supervision and consistency in regulatory requirements.  In 2021, the Conference of State Bank Supervisors released a revised model law after a two-year consultation process.^[xxiii]  Today, about half of states have adopted at least some part of the model law.  States also have recently begun coordinated multi-state exams.  But there are practical challenges to establishing the same standards in every state and limits as to how well those standards can address risks of business models that extend well beyond state borders.  

Goals and Key Elements

A federal framework for nonbank payment service providers may be better able to address these concerns.  Specifically, a federal framework can:

1.  Address risks which are essential to confidence in the money and payments system, like customer runs, payments disruptions, and financial stability risks.  It should better support a degree of confidence in nonbank money instruments.  This would include consistent reserve requirements and being able to intervene immediately in a crisis to ensure trust and continuity of services.  Coordinating an intervention for a nation-wide or global company across dozens of state regulators would not be possible in time.

2.  Promote innovation and fair competition that benefits consumers through a consistent and comprehensive, though calibrated, regulatory framework for bank and nonbank payments providers.  It is not the case today that the same activities and the same risks have the same regulatory requirements.  The introduction of a federal prudential regulatory framework for payments also raises the possibility that e-money issuers could get direct access to some public payment rails, like FedNow.^[xxiv]  Direct access would promote competition and innovation for payment services. 

3.  Support leadership of U.S. financial firms globally.  A clear, robust framework for domestic payments promotes a level playing field internationally.

With these important benefits in mind – trust in money and payments, innovation and competition, and global financial leadership – I will turn next to the key foundational elements of a federal framework and raise some topics for further discussion.  These elements also are consistent with our broader objectives for payment systems operations, including adherence to the standards established by PFMI and FATF, strong governance, and with the approach we’ve suggested for stablecoin issuers.^[xxv]  These elements complement other standards that already exist at the Federal level, like AML/CFT and consumer protection requirements, so I won’t discuss those.^[xxvi] 

I will discuss standards in four categories: (i) financial resources, (ii) risk management, (iii) supervision and enforcement and (iv) affiliation and activities restrictions.

1. Financial Resources.  To function as money, an e-money claim needs to be backed by high-quality and liquid assets so that a claim representing a $1 is worth $1 when redeemed.  E-money issuers also should have some minimum resources to protect against other kinds of loss and reduce the risk of insolvency.  Financial resource requirements thus serve several purposes.  First, they support trust in the value of money.  Second, financial resource requirements ensure that customers are protected if an e-money issuer becomes insolvent.  Finally, financial resource requirements mitigate risk to financial stability from customer runs, which we know can be contagious and destabilizing to the broader financial system.

   Calibrating these requirements raises important questions.  First, these requirements should reflect the products that e-money issuers do and don’t offer.  E-money issuers are not banks.  Instead, they generally offer a more limited range of payment-related services.^[xxvii]  The calibration of financial resource requirements should reflect this more limited product offering while credibly backing customer claims 1 for 1  with high-quality and liquid assets.  The calibration and composition of financial resource requirements may also have broader consequences.  To the extent that deposits flow to e-money issuers from banks, it could reduce credit provision or raise its costs.
     

2. Risk Management.  Risk management standards address a range of concerns.  I will highlight two.

   First, operational risks.  Payment systems need to be resilient and payments need to go to the right place and in the right amount.  Consistent and well-calibrated risk-management standards would help ensure that the system for making payments is accurate, operates under both high and low volumes of payments, at all times during defined operating hours, and is resilient to external threats like cyber-attacks.  This is critical for both users of the system and, potentially, for financial stability.  Failures or delays in some payments could spill over to other parts of the economy and the financial system.

   Second, third-party risk.  Making a payment involves many different intermediaries – from wallets, to banks, to processors, to tech providers and others. 

   I’ll use an example to help illustrate.  Let’s say that you want to buy a cup of coffee here in Chicago with e-money.  If you have funds stored with an e-money issuer and the coffee shop is set up with the same e-money issuer, your digital payment may settle “on the books” of the e-money issuer.  As I’ve just discussed, it is critical that this “on the books” settlement is reliable and resilient.  And, even in this simple case, the transaction may be enabled by technology provided by a third-party, like tap to pay.  Now let’s say instead that you don’t have funds stored with an e-money issuer.  In this case, your digital payment would be funded through a linked credit card or bank account, involving one or more banks, a credit card network, and potentially a mobile wallet.  It might even involve a wholesale settlement system between financial institutions. These interlinkages are usually – and should be! – seamless to the customer.  But for a payment to function smoothly, each of these nodes needs to operate as expected.

   This means that e-money issuers, like banks, must manage the risks associated with these third-party relationships.  The bankruptcy of Synapse – though not a bank or e-money issuer – illustrates the importance of managing risk in relationships among payments service providers.  And by applying a prudential regulatory framework to e-money issuers, we might also hope to facilitate bank partnerships with e-money issuers.  We may also consider whether other service providers – like some critical technology or network providers – should be subject to more supervision more directly.  This does not mean that these firms should be subject to the same kinds of standards as e-money issuers or banks.  Issuing money, as I’ve just discussed, presents special kinds of public policy considerations.  At the same time, the operational resilience of related intermediaries is critical to many payment arrangements.  
    

3. Supervision and Enforcement.  A regulatory framework is only as effective as its oversight and enforcement.  A federal framework should have a federal supervisor with the authority and resources necessary to examine e-money issuers and be able to act if standards are not being met.
    
4. Activities and Affiliation.
   Payment activities. To ensure a level competitive playing field, and to better calibrate requirements for e-money issuers, the regulatory framework needs to restrict e-money issuers to payments-related activities.  To the extent they instead extend credit and engage in significant maturity transformation, they would resemble banks and should be subject to bank-like rules. 
   Affiliation and separation of banking and commerce.  In addition, we may consider whether an e-money issuer’s affiliates should be subject to limitations on their activities.  In the United States, there generally are restrictions to support the separation of banking and commerce, based on competitive concerns and the potential for risks from one part of the business to spill into another.  The combination of a commercial or technology platform and payments presents some of these same themes of banking and commerce but is also distinguishable in some ways.  Some old solutions, like antitrust law or limiting the ability of a non-financial company to own or control payments provider can mitigate anti-competitive behavior.^[xxviii]  And some of these requirements already apply.  Some new solutions, like interoperability standards and restrictions on use of customer data, could also be needed.

V. Conclusion

A federal payments framework that includes the key foundational standards discussed above can both simplify our domestic regulatory patchwork and make the regulatory framework more robust.  We can promote innovation and competition, while better protecting consumers, the payment system, and the financial system.  We can create a more level playing field domestically and also support U.S. global financial leadership. 

These goals and solutions I have offered for e-money issuers are similar to points that the Secretary, the President’s Working Group on Financial Markets, the Financial Stability Oversight Council, and I have made regarding a federal regulatory framework for stablecoins.^[xxix]  We have long identified stablecoins as presenting payments and run risks like those presented today by e-money issuers.  At the same time, stablecoins present some unique risks because they rely on distributed ledger technology and thus may involve a different set of intermediaries and can be transferred peer-to-peer.  We continue to support efforts in Congress to establish such a framework.  

My remarks today were informed by our conversations with many stakeholders – consumer groups, payment providers, fintechs, banks, academics, and others — with a wide range of interests.  They have been invaluable in identifying key questions to consider.  I would like to conclude with an invitation to stakeholders to continue this conversation.  

Thank you.

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_[i] U.S. Department of the Treasury, “The Future of Money and Payments: Report Pursuant to Section 4(b) of Executive Order 14067,” September 2022.

_[ii]See e.g., Remarks by Under Secretary for Domestic Finance Nellie Liang “Modernizing U.S. Money and Payments: Technological and Regulatory Considerations” at the Peterson Institute for International Economics | U.S. Department of the Treasury, April 17, 2024; Remarks by Under Secretary for International Affairs Jay Shambaugh on New Technologies and Cross-border Payments, October 17, 2023.

_[iii]Individual consumers have different preferences for and access to payment methods.  See e.g., Berhan Bayeh, Emily Cubides, and Shaun O’Brien 2024 Findings from the Diary of Consumer Payment Choice.

_[iv] Bayeh, Cubides, and O’Brien, 2024.  Measured as total share of payments.

_[v] Id.

_[vi]Frost, Jon, Priscilla Koo Wilkens, Anneke Kosse, Vatsala Shreeti and Carolina Velásquez, 2024.  “Fast Payment Systems: Design and Adoption,” BIS Quarterly Review, Bank for International Settlements, March 4, 2024.

_[vii]A notable effort is Project Agora with joint participation from seven central banks and a consortium of private financial firms to develop and test a cross-border platform for cross-border payments.  See https://www.bis.org/about/bisih/topics/fmis/agora.htm

_[viii]While these new forms of money share a key similarity with deposits and other forms of money, they are not subject to the same regulatory framework or protected by deposit insurance. 

_[ix]See Bayeh, Cubides, and O’Brien, 2024; Consumer Reports, “Peer-to-Peer Payment Services,” January 10, 2023.

_[x] Consumer Reports, “Peer-to-Peer Payment Services,” January 10, 2023.  Similarly, the Federal Reserve Bank of Atlanta’s 2023 Survey and Diary of Consumer Payment Choice found that 72% of customers adopted online or mobile payment accounts like PayPal, Zelle, Venmo and Cash App in 2023, a statistically significant increase from 2022.

_[xi] One recent survey suggested that, on average, customers held about $300 in balances.  See, Erin El Issa, “Most Americans Go Mobile With Payment Apps — Here’s How They Roll – NerdWallet,” February 26, 2020. A 2022 Consumer Report Survey indicates that one in ten consumers hold balances in their payment account.  CFPB estimates customer balances in the “billions” but notes that precise figures are not known.  Consumer Financial Protection Bureau, “Issue Spotlight: Analysis of Deposit Insurance Coverage on Funds Stored Through Payment Apps | Consumer Financial Protection Bureau (consumerfinance.gov),” June 1, 2023.

_[xii]See e.g., Ron Shevlin, The Checking Account War is Over and the Fintechs Have Won, FORBES (July 5, 2023).

_[xiii] This type of stablecoins is distinct from a smaller subset of stablecoin arrangements that use other means to attempt to stabilize the price of the instrument (sometimes referred to as “synthetic” or “algorithmic” stablecoins) or are convertible for other assets.  Because of their more widespread adoption, this discussion focuses on stablecoins that represent a claim on the issuer and can be redeemed for dollars.

_[xiv] Angus Berwick, September 10, 2024, The Shadow Dollar That’s Fueling the Financial Underworld, Wall Street Journal.

_[xv] CoinMarketCap as of October 10, 2024.

_[xvi] Angus Berwick, September 10, 2024.

_[xvii]Nellie Liang, April 17, 2023.

_[xviii] See e.g., E. Gerald Gorrigan, Are Banks Special? Annual Report of the Federal Reserve Bank of Minneapolis, December 31, 1982.

_[xix] See PayPal, Global Payment Processing | PayPal US; Dan Awrey, “Bad Money,” Cornell Law Review, February 5, 2020. Estimating that PayPal’s capital was .0006%.

_[xx] In addition, even high-quality assets can fluctuate in value and may be difficult to monetize in stress.

_[xxi] Dan Awrey, 2020.

_[xxii] 87 Fed. Reg. 51099 (August 19, 2022). A prudential regulatory framework is one consideration used by Reserve Banks in evaluating requests for accounts and services. 

_[xxiii] Conference of State Banking Supervisors, “CSBS Money Transmission Modernization Act,” April 22, 2024, available at https://www.csbs.org/csbs-money-transmission-modernization-act-mtma   

_[xxiv]87 Fed. Reg. 51099 (August 19, 2022). A prudential regulatory framework is one consideration used by Reserve Banks in evaluating requests for accounts and services. 

_[xxv] President’s Working Group on Financial Markets, the Federal Deposit Insurance Corporation, and the

Office of the Comptroller of the Currency, Report on Stablecoins (Nov. 2021).

 

_[xxvii]Restrictions on the activities of the issuer – for example, to prohibit lending activities – would ensure that this remains true.  See Activities and Affiliation discussion.

_[xxviii] For example, banks are subject to anti-tying laws and activities limitations.  See 12 U.S.C. 1972(1); 12 U.S.C. 1464(q); 12 U.S.C. 24(seventh).  Parent companies are also subject to restrictions on their activities.  See 12 U.S.C. 1841 et seq.;12 U.S.C. 1467a.

_[xxix]PWG Report on Stablecoins; Financial Stability Oversight Council, Report on Digital Asset Financial Stability Risks and Regulation, 2022.

WASHINGTON – On Monday, October 7, 2024, the U.S. Department of the Treasury hosted an event with community development financial institutions (CDFIs), state government representatives, nonprofit groups, and stakeholders to discuss how credit support from the State Small Business Credit Initiative (SSBCI) can enable secondary markets for CDFI loans and increase CDFI lending throughout the country.  

At the event, participants discussed public-private partnership models to deploy SSBCI funding through CDFIs, best practices on how to facilitate CDFI participation in the SSBCI program, and ways to scale CDFI microlending to meet the credit needs of underserved small business owners.  

Treasury officials led discussions on ways to support CDFI lenders. These financial institutions play a critical role in reaching the most underserved communities and entrepreneurs, providing responsible and affordable alternatives to a myriad of predatory products in the market, while facing their own balance sheet constraints.  

Panelists discussed how the pandemic-era recovery funding generated opportunities to innovate public-private partnership models in community finance and small business lending, leading to the development of solutions to support the sustainability of federal investments. Panelists also stressed the importance of supporting small dollar lending for businesses owned by people of color. Lastly, the participants discussed ways that these models can be leveraged by jurisdictions and CDFIs with federal opportunities beyond SSBCI.  

Treasury in September 2024 released a report showing that entrepreneurship and small business growth have surged in recent years, with new business applications averaging 430,000 per month in 2024 or 50% more than in 2019.  Recent data shows that accessing the necessary financing to grow their businesses remains a significant challenge for many small business owners. Evidence suggests CDFIs played a key role in supporting small businesses during the pandemic. However, limited sources of capital are one of the key challenges faced by the CDFI industry. Despite growth in the number of CDFIs and growth in assets, CDFIs still make up a relatively small share of the overall lending market. The Treasury Department will continue engaging with stakeholders on ways to improve capital access to underserved business owners while supporting the mission-driven lenders who serve them.   

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WASHINGTON – Today, the U.S. Department of the Treasury announced the full list of awardees receiving funding to support small business growth through the Biden-Harris Administration’s State Small Business Credit Initiative (SSBCI) Investing in America Small Business Opportunity Program (SBOP) following recent announcements of several initial awards. SBOP is a $75 million competitive grant program that provides funding to connect underserved and very small businesses to the financing necessary to participate in key Investing in America supply chains, including electric vehicle manufacturing, semiconductor manufacturing, construction, transportation, clean energy generation, and more.  

As part of the Biden-Harris Administration’s economic agenda, the SBOP was designed to catalyze additional private sector investment by supporting small business in getting the legal, accounting, and financial advisory services they need and helping them to secure SSBCI-supported financing or other state and federal program support.  

“By increasing access to capital and making historic investments in infrastructure, clean energy, and manufacturing, we have spurred record-breaking small business growth over the last three years,” said Vice President Kamala Harris. “Since taking office, I have been proud to work to expand access to opportunity by investing in the small businesses that are the backbone of our communities. This funding from the Small Business Opportunity Program will build on this momentum by allowing tens of thousands of entrepreneurs from historically underserved communities to access the technical assistance they need in order to hire more employees, grow their businesses, and advance innovation.”

“More than 19 million new small business applications have been filed during the Biden-Harris Administration and we’re working to support these entrepreneurs and connect them to the customers and capital they need to grow,” said Secretary of the Treasury Janet L. Yellen. “The Biden-Harris Administration has fueled major investments in key sectors of our economy, and these resources will support technical assistance that connects small businesses around the country to important supply chains and new opportunities.”   

Overview of 14 SBOP Awardees: 

• Arizona, $7.9 million: The Arizona Commerce Authority will expand three existing programs: DreamBuilder, Moonshot, and the Arizona Manufacturing Extension Partnership. These programs will target business owners in rural and mining communities, conduct pitch competitions, and will provide training and advisory services.   
• California, $10 million: The California Office of the Small Business Advocate (CalOSBA) will create a new Procurement & Innovation Capital Leadership for Entrepreneurs (PINNACLE) program. This initiative will be supported by $16.25 million in matching funds from CalOSBA. 
• Cherokee Nation, $2 million: Cherokee Nation Commerce Services will connect underserved small businesses in the 14 Cherokee Nation counties in Oklahoma with industry experts and foster collaboration with local financial institutions. 
• Chickasaw Nation, $2 million: Chickasaw Nation will support businesses located in the Chickasaw Nation treaty territory, as well as Chickasaw-owned businesses across the U.S., with a focus on agriculture and construction businesses. Partners include Murray State College, the Ardmore Chamber of Commerce, and i2E, Inc. This initiative will be supported by $225,000 in matching funds by the Chickasaw Nation Community Development Endeavor.  
• Hawaii, $1.6 million: The Hawaii Technology Development Corporation will build a one-stop marketplace of vetted technical assistance providers. The Chamber of Commerce Hawaii will be an implementation partner.  
• Kansas, $2.6 million: The Kansas Department of Commerce Office of Small Business Development and Entrepreneurship will support the Kansas Launchpad program. Partners include the Kansas Office of Minority and Women Business Development, the Kansas Office of Innovation, the Kansas Office of Rural Prosperity, the Kansas Department of Agriculture, and NetWork Kansas.  
• Louisiana, $5.3 million: The Louisiana Department of Economic Development (LED) will work with regional economic development organizations and accelerators to connect businesses to capital, particularly SSBCI-supported equity capital. This initiative will be supported by $2.4 million in matching funds from LED. 
• Maryland, $10 million: The Maryland Technology Development Corporation will establish the Business Resource Information, Development, and Guidance Ecosystem (BRIDGE) to deliver services through a regional network of new and existing technical assistance providers, and will serve businesses in Maryland, Delaware, D.C., and Virginia. The University of Maryland, University of Maryland Baltimore, and Loaned Executives will be implementation partners. This initiative is supported by $2.2 million in matching funds by TEDCO and the University of Maryland. 
• Michigan, $9.1 million: The Michigan Strategic Fund and the Michigan Economic Development Corporation will implement the Michigan Auto Supplier Transition Program which will serve businesses in their transition from the internal combustion engine auto supply chain to electric vehicle production or an adjacent industry. Partners include the Michigan Minority Supplier Development Council, the University of Michigan Economic Growth Institute, Automaton Alley, the Michigan Manufacturing Technology Center, and the Michigan Manufacturers Association. This initiative is supported by $500 million in matching funds from Michigan Infrastructure Office.   
• Mississippi, $4.8 million: The Mississippi Development Authority will launch the Connect MS program, which will engage eight regional clusters and two program pathways to improve small businesses chances of a successful capital raise. Partners include the Mississippi Small Business Development Center network and Innovate Mississippi. This initiative is supported by $2.2 million in matching funds from Innovate Mississippi  
• Nevada, $4.2 million: The Nevada Governor’s Office of Economic Development will deliver programming to startups, healthcare businesses, rural and Tribal businesses, and advanced manufacturing businesses, particularly those producing lithium batteries and other EV components. Partners include the Nevada Small Business Development Center, the Nevada Tech Hub, and National Science Foundation Engines grantees in Nevada. 
• New York, $9.4 million: Empire State Development (ESD) will launch the Semiconductor Growth Access Program (SGAP) to help businesses grow in or pivot to the semiconductor supply chain in upstate New York. Key partners include NY Smart I-Corridor Tech Hub, Mohawk Valley Economic Development Growth Enterprises Corporation, and the Capital Region Center for Economic Growth. This initiative is supported by $1.5 million in matching funds from ESD.  
• Oklahoma, $4.2 million: The Oklahoma Center of Science and Technology (OCAST) will launch Roadmap2Success, focused on businesses that safeguard Oklahoma’s telecommunications infrastructure from cyber threats and bolster biotechnology and advanced mobility industries. Partners include Oklahoma Biotech Innovation Cluster, Oklahoma Broadband Office, University of Tulsa’s Oklahoma Cyber Innovation Institute, and the Tulsa Regional Advanced Mobility Corridor. This initiative is supported by $384,000 in matching funds by OCAST. 
• Rhode Island, $1.6 million: The Rhode Island Commerce Corporation will expand the RI Rebounds Technical Assistance Program focused on the construction, transportation, and renewable energy industries. Rhode Island’s Future will be an implementation partner. 

A fact sheet summarizing all 14 SBOP awards can be found here. 

Selected jurisdictions will build or expand technical assistance programs focused on connecting very small and underserved businesses to financing available through SSBCI, or other state or federal small business programs, including in infrastructure, manufacturing, clean energy, or climate resiliency. Jurisdictions have been selected based on their plans to create innovative, high-impact models of small business technical assistance delivery that demonstrate a vision to improve access to capital for historically overlooked businesses across the nation.   

The American Rescue Plan Act reauthorized and expanded SSBCI, which provides nearly $10 billion to support small businesses and empower them to access the capital needed to invest in job-creating opportunities. SSBCI provides funds to states, the District of Columbia, territories, and Tribal governments to promote American entrepreneurship, support small business ownership, and democratize access to capital across the country, including in underserved communities. Through the SSBCI Capital Program, Treasury has approved plans for small business financing programs totaling over $8.7 billion and representing every state and territory, the District of Columbia, and 280 Tribal governments. 

In addition to today’s announcement, Treasury has announced the approvals of SSBCI Technical Assistance grants allocated by formula to states, the District of Columbia, territories, and Tribal governments, representing $145 million for 48 jurisdictions. Treasury anticipates additional approvals of applications to follow. See the full list of approved programs here.  

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WASHINGTON — Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Algoney Hamdan Daglo Musa (Algoney), pursuant to Executive Order (E.O.) 14098, for leading efforts to supply weapons to continue the war in Sudan. The war between the Sudanese Armed Forces (SAF) and the Rapid Support Forces (RSF) has caused immense devastation, leaving tens of thousands dead, more than 11 million displaced, and millions facing emergency levels of hunger.  Algoney is the procurement director of the RSF and a brother of Mohammed Hamdan Daglo (Hemedti), the leader of the RSF. Algoney has extended this war by leading RSF efforts to procure weapons and military materiel. By arming the RSF, his actions have directly contributed to the RSF’s ongoing siege of El Fasher in North Darfur, a city of nearly two million vulnerable civilians, and the RSF’s operations elsewhere in Sudan.

“At a time when the United States, the United Nations, the African Union, and others are advocating for peace, key individuals on both sides—including Algoney Hamdan Daglo Musa—continue to procure weapons to facilitate attacks and other atrocities against their own citizens,” said Acting Under Secretary of the Treasury for Terrorism and Financial Intelligence Bradley T. Smith. “The United States will continue to hold accountable those who seek to prolong this conflict and restrict access to vital humanitarian assistance at a time of famine and fragility.”

Key RSF procurement official

Algoney is the RSF’s procurement director and one of the younger brothers of Mohammed Hamdan Daglo (Hemedti), the head of the RSF. He is close to Hemedti, having also previously worked as his personal secretary. Algoney is a key officer within the RSF, especially given Hemedti’s preference for staffing key roles in the organization with his family members. Algoney has controlled RSF front companies, including the OFAC-sanctioned Tradive General Trading, which imported vehicles to Sudan on behalf of the RSF. 

Algoney is being designated, pursuant to E.O. 14098, for being a foreign person who is or has been a leader, official, senior executive officer, or member of the board of directors of the RSF, an entity that has, or whose members have, engaged in actions or policies that threaten the peace, security, or stability of Sudan relating to the tenure of such leader, official, senior executive officer, or member of the board of directors.

SANCTIONS IMPLICATIONS

As a result of today’s action, all property and interests in property of the designated persons described above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. 

In addition, financial institutions and other persons that engage in certain transactions or activities with the sanctioned entities and individuals may expose themselves to sanctions or be subject to an enforcement action. The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any designated person, or the receipt of any contribution or provision of funds, goods, or services from any such person. 

The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the Specially Designated Nationals and Blocked Persons (SDN) List, but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s Frequently Asked Question 897 here. For detailed information on the process to submit a request for removal from an OFAC sanctions list, please click here.

Click here for more information on the individuals and entities designated today.

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Proposed rules describe that Tribally chartered entities have same federal tax status as their owning Tribes and clarify Tribal eligibility for elective pay to access Inflation Reduction Act tax credits

WASHINGTON – Today, the U.S. Department of the Treasury and the IRS issued a Notice of Proposed Rulemaking (NPRM) clarifying that wholly-owned Tribal entities chartered or organized by one or more Tribes have the same tax status of their owning Tribes. This means that these Tribal entities – businesses entirely owned by a Tribe – would not be subject to federal income tax. The proposed rule recognizes that Tribal economies are unique and rely on Tribal businesses to generate government revenue. The rule also would make these Tribal entities eligible for certain Inflation Reduction Act clean energy tax credits through a payment mechanism known as elective pay, commonly referred to as direct pay, that allows entities without federal tax liability to receive the full benefit of these incentives.

“For far too long, tax uncertainty has held back tribes’ economic opportunity, and the Biden-Harris Administration is reversing that trend. Tribally chartered entities generate critical revenue for their communities, and today’s rules recognize their tax status to enable them to further their contributions to economic development,” said U.S. Deputy Secretary of the Treasury Wally Adeyemo. “The Biden-Harris Administration will continue to support Tribal communities, ensuring Tribes are able to easily access the Inflation Reduction Act’s clean energy tax credits to help lower utility costs and strengthen energy security.”

“The Biden-Harris Administration’s new policy clarifying that Tribally chartered businesses are exempt from income taxes is a crucial step in the development of Native communities,” said U.S. Senator Catherine Cortez Masto. “This will give tribes the certainty they need to use new tools, including the Inflation Reduction Act, to expand opportunity and support economic development on Tribal lands. As a member of the Senate Indian Affairs Committee, I will continue fighting for the economic prosperity of tribes in Nevada.”

“We must ensure that our tax code recognizes the unique challenges facing Native American families and communities,” said U.S. Congressman Dan Kildee. “Thanks to the Biden-Harris Administration and new laws passed by Democrats like the Inflation Reduction Act, tribes can now take advantage of new tax credits to create new clean energy investments. This new effort will help support more clean energy projects and good-paying jobs across Indian Country.”

“Tribal governments have long requested guidance from Treasury and the IRS on the tax status of Tribally chartered corporations. Without guidance, Tribal Nations face uncertainty and the threat of a potential audit, which has hindered their economic growth,” said U.S. Congresswoman Gwen Moore. “I appreciate that the Biden-Harris Administration is making progress by addressing the Federal tax status of corporations chartered under Tribal law that are wholly owned. And, I eagerly await further guidance on the treatment of such corporations that are majority owned or jointly owned by a Tribe.”

“Today’s proposed regulations from the Department of the Treasury and the IRS signify a pivotal moment for tribal economic development,” said Mashantucket Pequot Tribal Nation Chairman Rodney Butler, President of NAFOA (founded as the Native American Finance Officers Association). Chairman Butler is also a member of the Treasury Tribal Advisory Committee (TTAC), where NAFOA serves as a technical advisor. “These regulations recognize the importance of Tribal economies and Tribal sovereignty and demonstrate the value of meaningful Tribal consultation and the essential work of the TTAC and its advisors.”

“This second tranche of new draft regulations makes clear that the U.S. Treasury Department values the input of Tribal Nations and Tribal leadership it has received through the years. These proposed new rules use Tribal sovereignty as a foundation and put a premium on Tribal self-determination,” said Mark Macarro, President of the National Congress of American Indians. “Representation also matters. The Biden-Harris Administration has appointed Tribal leadership into critical policy seats as exemplified by US Treasurer Lynn Malerba, Chief of the Mohegan Tribe and her team at Treasury. This tilt toward embracing Tribal sovereignty in federal rulemaking should not be anomalous. With the leadership Treasury has shown, now other agencies’ leadership will see that the primacy of Tribal government decision-making is valued.”

“This guidance will increase those tribal entities’ access to credit, the larger capital market, and provide the certainty we need to negotiate better terms and expand the breadth and depth of what these entities bring to tribal governments to fund basic services to tribal citizens,” said Coalition of Large Tribes Executive Director OJ Semans, Sr.

“For over 30 years, Tribal Nations have been awaiting confirmation that Tribally chartered corporations and entities are not subject to federal income tax. Uncertainty regarding the tax status of Tribal entities has been a significant federal policy barrier faced by Tribal Nations as we seek to build our economies and generate our own governmental revenues. Today, Treasury and IRS are taking historic steps to remove this barrier to economic development in Indian Country,” said United South and Eastern Tribes Sovereignty Protection Fund President, Chief Kirk Francis. “While we recognize there is still more to do on this front, we extend our deep appreciation to Treasury, especially its Office of Tribal and Native Affairs, the IRS, and the TTAC, for the considerable work involved in developing this guidance and urge its swift finalization.”

“Adoption of the proposed rule will immediately foster improved access to credit and directly enhance resources needed for economic development, service provision, and infrastructure investment across America’s Native nations. The tribal and non-tribal citizens of the United States will benefit,” said Joseph P. Kalt, Co-Founder and Director of Harvard University’s Harvard Project on Indigenous Governance and Development.

Today’s guidance is needed because, as a result of federal policy, Tribal Nations largely lack the same property, income, and sales tax bases as non-Tribal governments. Tribal Nations, therefore, rely on commercial entities to generate government revenue and have historically accorded their sovereign privileges and immunities to these entities. Over the past 30 years, Tribes have requested confirmation that their wholly-owned entities chartered under Tribal law (Tribally chartered entities) share their tax status because tax certainty is critical to Tribal economic development.

Upon the passage of the Inflation Reduction Act, the question of the tax status of Tribally chartered entities became especially critical as many Tribes began projects, owned by their Tribally chartered entities, to seek clean energy tax credits that are available to Indian tribal governments for the first time.

The proposed rule describes that federally-chartered Tribal corporations and wholly-owned Tribal entities may directly register for and claim applicable clean energy tax credits through a payment mechanism known as elective pay. In addition, Tribally chartered entities and Federally chartered Tribal corporations that are wholly owned by multiple Tribes may also be the entity that registers for and claims applicable clean energy tax credits via elective pay.

Tribes may rely on the rules issued today for tax years that precede the date of the NPRM.

Today’s guidance follows robust consultations with Tribal Nations and the Treasury Tribal Advisory Committee (TTAC) that explained that wholly owned Tribally chartered entities are an exercise of their inherent sovereign authority to generate governmental revenue, self-govern the use of that revenue according to their own laws, and self-determine the use of that revenue for their citizenry. This guidance demonstrates Treasury’s recognition, support, and protection of principles of Tribal sovereignty, sovereign immunity, and self-governance that have been repeatedly reaffirmed by the Supreme Court and outlined in the Biden-Harris Administration’s Executive Order 14112.

This guidance follows on our September 2024 publication of a proposed rule on the Tribal General Welfare Exclusion Act, which would enable Tribes to provide assistance to Tribal communities that is excludable from gross income. Like today’s proposed rule, that NPRM addresses a decade of tax uncertainty and supports deference to Tribal Nations and support for Tribal self-determination on their community’s needs.

Today’s proposed regulations build upon Treasury’s historic investment in its Tribal relations through creation of its first Office of Tribal and Native Affairs under the first Native American Treasurer, former TTAC member Chief Malerba. This Office has worked across the Department to support the administration of $30 billion in recovery set asides to Tribal Nations and support for Tribal access to the billions in clean energy tax credits through the Inflation Reduction Act.

Treasury welcomes public comment on this rule and is commencing Tribal consultation on these proposed regulations. To learn more about this rule, see the Dear Tribal Leader Letter, Consultation and Federal Feedback Summary, and Tribal Fact Sheet.

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WASHINGTON – Today, the U.S. Department of the Treasury (Treasury) announced that the California Office of the Small Business Advocate is being awarded $10 million to support small business growth through the Biden-Harris Administration’s State Small Business Credit Initiative (SSBCI) Investing in America Small Business Opportunity Program (SBOP). California’s initiative will be supported by $16.25 million in matching funds.

Part of the Biden-Harris Administration’s economic agenda, this $75 million program provides funding to connect underserved and very small businesses to the capital needed to participate in key Investing in America supply chains, including electric vehicle manufacturing, semiconductor manufacturing, construction, transportation, clean energy generation, and more. The SBOP was designed to catalyze additional private sector investment by supporting small business technical assistance services like accounting and legal services.

“The Biden-Harris Administration’s economic agenda is focused on continuing the historic small business boom by helping small businesses across the country grow and hire,” said U.S. Deputy Secretary of the Treasury Wally Adeyemo. “With this new funding, California will be able to provide one-on-one support to help entrepreneurs seize new opportunities created by state investments in infrastructure and innovation.”  

“Today’s announcement to fund critical small business technical assistance programs will help ensure that more small businesses can thrive, as part of the Biden-Harris Administration plan that is powering a small business boom with a record 19 million new business applications so far,” said National Economic Advisor Lael Brainard.  

“America’s small businesses are the engine of our economy – and as I often say, there is nothing more optimistic than starting a small business,” said Speaker Emerita Nancy Pelosi. “As Speaker, I was proud to partner with President Biden and lead House Democrats in delivering transformative investments for our small businesses – and I’m thrilled to join in celebrating this federal funding to bring those investments to California. Democrats are proud to support small businesses and their great optimism, entrepreneurialism and courage, which are the lifeblood of the American economy.” 

“This $10 million investment is a huge win for California’s small businesses, helping them grow, create jobs, and lead in industries that drive our future,” said California Lieutenant Governor Eleni Kounalakis. “By supporting California’s efforts to provide essential resources, technical support, and access to capital, this investment will ensure our state remains at the forefront of economic growth and innovation, especially for small businesses owned by women and people of color. I am grateful for the Biden-Harris Administration’s commitment to fostering inclusive economic opportunity and supporting the backbone of California’s economy.” 

“This funding will go a long way in making sure that small businesses across California not only know about billions of dollars in low cost federal and state financing available to them, but also receive any technical assistance necessary to apply for these funds.” said U.S. Congresswoman Maxine Waters. “I am particularly pleased that this award is coming from the State Small Business Credit Initiative, an initiative I helped to create in 2010 and later led the effort to renew and expand in partnership with the Biden-Harris Administration in 2021. California’s small businesses, and especially its diverse-owned businesses, are too often ignored by our traditional banking system, but through this program can receive critical capital financing to better serve their communities. I look forward to working with the Treasury Department and state agencies to spread the word about these resources.” 

“Reauthorized and expanded by Congressional Democrats and the Biden-Harris Administration through the American Rescue Plan, SBOP supports small businesses nationwide receive the access to capital and technical assistance they need to succeed–barriers disproportionately impacting businesses owned by women and people of color,” said U.S. Congresswoman Judy Chu. “With today’s announcement, entrepreneurs in the San Gabriel Valley and around California will be able to take advantage of the new PINNACLE program’s wealth of resources, training, and other forms of assistance to help them not just stay afloat but thrive and magnify their contributions to their communities.” 

“CalOSBA is honored and grateful that the U.S. Treasury has chosen our application through this competitive process,” said CalOSBA Director Tara Lynn Gray. “Our proposal is designed to complement both the existing federal investment in our Technical Assistance for Capital Readiness Program and state-level investment from Governor Newsom’s administration in our Accelerate California program. The team at CalOSBA is tasked with diversifying California’s innovation economy and increasing small business participation in state contracting – both of which will be greatly assisted by this new funding.” 

The Office of the Small Business Advocate within the Governor’s Office of Business and Economic Development submitted the application for the SBOP award, which was selected through a competitive process. Using this $10 million, CalOSBA will create a new Procurement & Innovation Capital Leadership for Entrepreneurs (PINNACLE) program. 

PINNACLE will build upon the $25.3 million in SSBCI Formula Technical Assistance funding invested in building CalOSBA’s SCALE technical assistance network. The PINNACLE program would help small businesses take advantage of opportunities created by a requirement for all state agencies to meet or exceed 25% small business participation in their procurement pipelines; $180 billion in infrastructure spending over the next 10 years; and the Accelerate California network of 13 Inclusive Innovations Hubs supporting diverse creation and growth of new fast-growth, high-wage businesses.

PINNACLE funding will be used to support underserved small businesses, including those owned by people of color and women, with the capacity to take advantage of these opportunities by providing one-on-one counseling, training, and resources. 

Selected SBOP jurisdictions will build or expand technical assistance programs focused on connecting very small and underserved businesses to financing available through SSBCI, or other state or federal small business programs, including in the infrastructure, manufacturing, clean energy, or climate resiliency space. Jurisdictions have been selected based on their plans to create innovative, high-impact models of small business technical assistance delivery that demonstrate a vision to improve access to capital for historically overlooked businesses across the nation.

The American Rescue Plan Act reauthorized and expanded SSBCI, which provides nearly $10 billion to support small businesses and empower them to access the capital needed to invest in job-creating opportunities. SSBCI provides funds to states, the District of Columbia, territories, and Tribal governments to promote American entrepreneurship, support small business ownership, and democratize access to capital across the country, including in underserved communities. Through the SSBCI Capital Program, Treasury has approved plans for small business financing programs totaling over $8.7 billion and representing every state and territory, the District of Columbia, and 280 Tribal governments. 

In addition to today’s announcement, Treasury has announced the approvals of SSBCI Technical Assistance grants allocated by formula to states, the District of Columbia, territories, and Tribal governments, representing $145 million for 48 jurisdictions. Treasury anticipates additional approvals of applications to follow. See the full list of approved programs here.

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WASHINGTON — Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated three individuals and one sham charity that are prominent international financial supporters of Hamas, as well as one Hamas-controlled financial institution in Gaza. OFAC also designated a longstanding Hamas supporter and nine of his businesses. These actors play critical roles in external fundraising for Hamas, often under the guise of charitable work, that finance the group’s terrorist activities. Today’s action, which is being taken pursuant to the counterterrorism authority Executive Order (E.O.) 13224, as amended, highlights the abuse of the non-profit organization (NPO) sector by terrorist financiers through the use of sham charities to generate revenue. 

“As we mark one year since Hamas’s brutal terrorist attack, Treasury will continue relentlessly degrading the ability of Hamas and other destabilizing Iranian proxies to finance their operations and carry out additional violent acts,” said Secretary of the Treasury Janet L. Yellen. “The Treasury Department will use all available tools at our disposal to hold Hamas and its enablers accountable, including those who seek to exploit the situation to secure additional sources of revenue.”

Treasury is committed to exposing terrorists and terrorist organizations that abuse the NPO sector. By publicly identifying a sham charity, this action reduces the overall risk of the NPO sector and helps preserve access by legitimate humanitarian organizations to financial services. 

Today’s action is the eighth tranche of U.S. designations targeting Hamas’s financial support networks since the horrifying terrorist attack of October 7, 2023. This includes an April 12, 2024 action sanctioning Hamas cyber actors, and October 18, 2023 and October 27, 2023 actions targeting sources of Hamas financing and financial facilitators. The United States continues to closely coordinate with its partners in targeting Hamas, including a joint designation with Australia and the United Kingdom on January 22, 2024 that targeted Hamas financial facilitators, as well as three actions with the United Kingdom on March 27, 2024, December 13, 2023, and November 14, 2023 targeting Hamas leaders and financiers. 

The United States remains committed to working with our key partners and allies to counter the terrorist threats or terrorist organizations in the region. These designations were also enabled by key analysis and information from Treasury’s Financial Crimes Enforcement Network (FinCEN).

HAMAS’S USE OF SHAM & FRONT CHARITIES 

Hamas has exploited the suffering in Gaza to solicit funds through sham and front charities that falsely claim to help civilians in Gaza. Hamas affiliates raise funds through sham or front charities and also seek to garner public support for the group. As of early 2024, Hamas may have received as much as $10 million a month through such donations. Hamas considers Europe to be a key source of fundraising and has maintained representation across the continent for many years in part to raise funds through sham charities.  

HAMID AL AHMAR: INTERNATIONAL HAMAS SUPPORTER AND BUSINESSMAN

Hamid Abdullah Hussein al Ahmar (al Ahmar), a Yemeni national living in Türkiye, is one of the most prominent international supporters of Hamas. He is a key member of Hamas’s once-secret investment portfolio, which at its peak managed over $500 million worth of assets enabling Hamas’s leaders to live in luxury outside the Palestinian territories despite the real humanitarian needs of the people of Gaza. Since at least 2013, Al Ahmar has also been the chairman of the Lebanon-based Hamas sham charity Al-Quds International Foundation, which OFAC designated in October 2012 for being controlled by Hamas. 

Al Ahmar is being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Hamas. Al Ahmar is also being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Al-Quds International Foundation.

OFAC is also designating the following nine entities pursuant to E.O. 13224, as amended, for being owned, controlled, or directed by, directly or indirectly, al Ahmar:

• Al Ahmar Trading Group, based in Yemen.
• Al Ahmar Oils Supply and Distribution, based in Yemen.
• Sama International Media, based in Yemen.
• Al Salam Trading and Agencies General Establishment, based in Yemen. 
• Saba, Trade & Investment S.R.O., based in Czechia.
• Sabafon International SAL (Offshore), based in Lebanon.
• Sabaturk Dis Ticaret Anonim Sirketi, based in Türkiye.
• Vivid Enerji Yatirimlari Anonim Sirketi, based in Türkiye.
• Investrade Portfoy Yonetimi Anonim Sirketi, based in Türkiye.

EUROPE-BASED HAMAS FUNDRAISERS

Mohammad Hannoun (Hannoun) is an Italy-based Hamas member who established the Charity Association of Solidarity with the Palestinian People, or Associazione Benefica di Solidarietà con il Popolo Palestinese (ABSPP), a sham charity in Italy which ostensibly raises funds for humanitarian purposes, but in reality helps bankroll Hamas’s military wing. As an executive at ABSPP, Hannoun has sent money to Hamas-controlled organizations since at least 2018. He has solicited funding for Hamas with senior Hamas officials and sent at least $4 million to Hamas over a 10-year period.

Majed al-Zeer (al-Zeer) is the senior Hamas representative in Germany, who is also one of the senior Hamas members in Europe and has played a central role in the terrorist group’s European fundraising. He has appeared publicly with other senior Hamas members in order to generate funding and other support for Hamas. Al-Zeer has also served in Hamas delegations in the Middle East along with Adel Doughman and Hannoun.

Adel Doughman (Doughman) is in charge of Hamas activity in Austria and is another one of the most prominent Hamas representatives in Europe. He has been closely associated with senior Hamas leaders and has held senior positions in institutions affiliated with Hamas, which transfer money to the organization. Doughman participates in conferences and delegations on behalf of Hamas and works with other institutions designated by the United States for their affiliation with Hamas, to include Union of Good and the al-Quds International Institution.

Hannoun and ABSPP are being designated for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, Hamas.

Al-Zeer and Doughman are being designated for having acted or purported to act for or on behalf of, directly or indirectly, Hamas.

HAMAS-CONTROLLED BANK

Hamas uses unlicensed banks, like Al-Intaj Bank (Al-Intaj), to continue to fund internal operations and to skirt international sanctions by operating outside the international financial system. Founded in 2013, Al-Intaj is an unlicensed Hamas-run bank in Gaza that provides financial services for Hamas despite not being connected to international banks. The Palestine Monetary Authority did not provide a license for this bank to operate; instead, the bank received a permit from the Hamas-led administration in Gaza.

Al-Intaj is being designated pursuant to E.O. 13224, as amended, for being owned, controlled, or directed by, directly or indirectly, Hamas.

SANCTIONS IMPLICATIONS

As a result of today’s action, all property and interests in property of the designated persons described above, and of any entities that are owned directly or indirectly, 50 percent or more by them, individually, or with other blocked persons, that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. 

U.S. persons must comply with OFAC regulations, including all U.S. citizens and permanent resident aliens regardless of where they are located, all persons within the United States, and all U.S.-incorporated entities and their foreign branches. Non-U.S. persons are also subject to certain OFAC prohibitions. For example, non-U.S. persons are prohibited from causing or conspiring to cause U.S. persons to wittingly or unwittingly violate U.S. sanctions, as well as engaging in conduct that evades U.S. sanctions. Violations of OFAC regulations may result in civil or criminal penalties.

In addition, non-U.S. financial institutions and other persons that engage in certain transactions or activities with sanctioned entities and individuals may expose themselves to sanctions risk or be subject to an enforcement action. The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any designated person, or the receipt of any contribution or provision of funds, goods, or services from any such person. 

OFAC may impose civil penalties for sanctions violations based on strict liability, meaning that a person subject to U.S. jurisdiction may be held civilly liable even if such person did not know or have reason to know that it was engaging in a transaction that was prohibited under sanctions laws and regulations administered by OFAC. OFAC’s Economic Sanctions Enforcement Guidelines provide more information regarding OFAC’s enforcement of U.S. economic sanctions, including the factors that OFAC generally considers when determining an appropriate response to an apparent violation. For additional information on complying with U.S. sanctions and export control laws, please see Department of Commerce, Department of the Treasury, and Department of Justice Tri-Seal Compliance Note.

Furthermore, engaging in certain transactions with the individuals designated today entails risk of secondary sanctions pursuant to E.O. 13224, as amended. Pursuant to this authority, OFAC can prohibit or impose strict conditions on the opening or maintaining in the United States of a correspondent account or a payable-through account of a foreign financial institution that knowingly conducted or facilitated any significant transaction on behalf of a Specially Designated Global Terrorist.

The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the Specially Designated Nationals and Blocked Persons (SDN) List, but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s Frequently Asked Question 897 here. For detailed information on the process to submit a request for removal from an OFAC sanctions list, please click here.

Treasury remains committed to enabling the flow of legitimate humanitarian assistance supporting the basic human needs of vulnerable populations, while continuing to deny resources to malicious actors. Accordingly, OFAC sanctions programs contain provisions for legitimate humanitarian support to vulnerable populations, including authorizations for certain humanitarian transactions in support of nongovernmental organizations’ activities. For more information, please review relevant authorizations and guidance on OFAC’s website.

Click here for more information on the persons designated today.

Additional Treasury resources on countering the financing of terrorism and providing humanitarian assistance to the Palestinian people:

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