By Hadeel Al-Sayegh John O'Donnell Elizabeth Howcroft

LONDON/DUBAI, Oct 13 (Reuters) - The Islamic Resistance Movement (Hamas) is using a global financing network to receive support from charities and friendly countries, by moving money through Gaza tunnels or using cryptocurrencies to evade international sanctions, experts and officials said.

But Hamas, which rules the Gaza Strip, will face more obstacles in accessing funds after its attack, which killed hundreds of Israelis, most of them civilians, and after Israel responded by launching the heaviest bombing of Gaza in the 75-year conflict.

This week, Israeli police said they had frozen a bank account at Barclays Bank that authorities said was linked to fundraising for Hamas and banned cryptocurrency accounts used to collect donations, without specifying the number of accounts or the value of assets.

This step shed light on a complex financial network supporting Hamas and its government in the Gaza Strip, which it has run since 2007. Some of this network is legitimate and most of it is largely hidden.

Matthew Levitt, a former US official specializing in counter-terrorism, said that the bulk of Hamas' budget, which exceeds $300 million, comes from taxes on economic activity and from countries such as Iran and Qatar or charities.

Last February, the US State Department said that Hamas was raising money in other Gulf countries and obtaining donations from Palestinians, other expatriates, and its charities.

Reuters was not able to reach Hamas officials to comment on this report. Hamas has said in the past that the financial restrictions imposed on its donors are an attempt to stifle legitimate resistance against Israel.

Levitt said that Hamas, which is classified as a terrorist organization by the United States and countries such as Britain, is increasingly using cryptocurrencies, credit cards or fake business deals to avoid increasing international restrictions.

“Hamas is one of the most successful users of cryptocurrencies in financing terrorism,” said Tom Robinson, co-founder of Elliptic, a blockchain research company.

But the movement said this year that it would stop cryptocurrency activity, after a series of losses. The cryptocurrency ledger system makes it possible to track such transactions.

Blockchain researchers at TRM Labs said this week in a research note that fundraising in cryptocurrencies had previously increased following rounds of violence involving Hamas. TRM Labs said that after a conflict in May 2021, Hamas-controlled cryptocurrency accounts received more than $400,000.

However, TRM Labs said that since the violence that occurred early last week, prominent support groups linked to Hamas have transferred only a few thousand dollars through encryption.

The company added, “One likely reason for the low volume of donations is that the Israeli authorities are targeting them immediately,” and that Israel has confiscated cryptocurrencies “worth tens of millions of dollars” from accounts linked to Hamas in the past few years.

Between December 2021 and April of this year, Israel confiscated about 190 encrypted accounts that it said were linked to Hamas.

* Shipping transactions and shell companies

Hamas allies have found ways to deliver cash to Gaza, whether through cryptocurrencies or other means. The US State Department said that Iran provides up to $100 million annually in support of Palestinian groups, including Hamas, and pointed to methods of transferring money through shell companies, shipping transactions, and precious metals.

The Iranian authorities did not respond to a request for comment.

The US Treasury Department said that Hamas had established a secret network of companies by last year that managed investments amounting to $500 million in companies from Turkey to Saudi Arabia, and the ministry announced sanctions on the companies in May 2022.

Israel has often accused Iran's religious rulers of fueling violence by supplying weapons to Hamas. Tehran, which does not recognize the existence of Israel, says it provides moral and material support to Hamas.

Supporting the Palestinian cause has been one of the pillars of the Islamic Republic since the 1979 revolution and a means for Iran to present itself as the leader of the Islamic world.

Qatar has also paid hundreds of millions of dollars to Gaza since 2014, and at one point was spending $30 million a month to help operate the Strip's only power plant and support poor families and employees of the Hamas-run government.

A Qatari official said in response to a request to the government for comment, “Qatari aid provides $100 to the poorest Palestinian families and extends the period of electricity operation during the day in Gaza, adding that this helped maintain stability and quality of living... for Palestinian families.”

Qatar takes a volatile approach to its foreign policy, as it has the largest American military base in the region, and it also hosts the Taliban and other groups, and this often allows it to mediate.

* Monetary rules

A source familiar with the progress of the financing process said that Qatar’s financing of Gaza actually passes through Israel.

The money is transferred electronically from Qatar to Israel. Israeli and UN officials carry the money across the border into Gaza.

The money is distributed directly to poor families and government employees in Gaza, and each family or individual must sign in front of their names to prove that they have received the money. A copy of that list is sent to Israel, another to the United Nations, and a third to Qatar.

The Qatari government official said, "Qatari aid to the Gaza Strip is fully coordinated with Israel, the United Nations, and the United States."

In the past few years, Qatar has purchased fuel from Israel to operate the only electricity station in Gaza. It also sent Egyptian fuel, which Hamas could resell and use its profits to pay salaries.

Stephen Reimer of the Royal United Services Institute predicted that recent attempts to prevent the movement from accessing official funding channels will achieve limited success. "Their financing methods have grown to enable them to circumvent these (restrictions)," he added.

(Additional reporting by Saeed Azhar in New York, Sinead Cruz, Tom Wilson and Tommy Wilkes in London, Andrew Mills in Doha and Parisa Hafezi in Dubai - Prepared by Muhammad Harfouche and Muhammad Aysem for the Arab Bulletin - Editing by Ali Khafaji)