Cryptocurrency Transfers Expose Terrorist Financing Red Flags for Compliance Teams

The United States Department of Justice (DOJ) has charged Catherine Beth Washburn, 37, of Irondequoit, New York, with attempting to provide material support to the Palestine Islamic Jihad (PIJ), a designated Foreign Terrorist Organization (FTO). The charge carries a maximum penalty of 20 years' imprisonment and a $250,000 fine.

According to the criminal complaint, Washburn made approximately 80 separate transfers of cryptocurrency totalling around 30,116 USDC (roughly $30,116) to an individual who identified himself as a PIJ fighter operating in Gaza. The Federal Bureau of Investigation's (FBI) Joint Terrorism Task Force (JTTF) recovered electronic messages in which the two discussed purported attacks, weapons and ammunition, and in which Washburn expressed explicit support for violence against Israeli civilians. She is alleged to lead the Direct Action Movement for Palestinian Liberation (DAMPL), a group formed after the October 2023 Hamas attack that endorses sabotage and property destruction.

The typology here should be familiar to anyone monitoring virtual asset flows. The case illustrates a now well-established pattern: low-value, high-frequency stablecoin transfers to a single overseas counterparty, structured in a way that would not individually breach conventional monetary reporting thresholds but which, aggregated over time, constitute a material financing channel. The use of USDC — a dollar-pegged stablecoin offering price stability and cross-border settlement without a traditional correspondent banking relationship — is a recurring feature of terrorist financing casework and reinforces the value of behavioural and network analysis over threshold-driven monitoring alone.

For UK firms, the relevance is direct. Crypto-asset businesses registered with the Financial Conduct Authority (FCA) under the Money Laundering Regulations are obliged to identify and report precisely this kind of activity, and the Terrorism Act 2000 imposes both a reporting duty and a substantive offence for the provision of funds where there is knowledge or reasonable suspicion of terrorist use. The pattern of repeated small transfers to a consistent beneficiary, coupled with adverse open-source indicators around the customer's affiliations and public statements, is exactly the sort of composite signal that suspicious activity reporting is designed to capture. The case is also a reminder that ideological affiliation and self-fundraising activity, where detectable, materially strengthen the basis for a disclosure.

Read the press release here.