UN cash transfers intended for Gazan civilians are being exploited by Hamas, which manipulates the aid system to extract financial gains, thereby strengthening its control over Gaza. Approximately $39.66 million is sent monthly through various international organizations, with a significant portion of this aid being converted into cash at high fees, often due to the involvement of money changers linked to Hamas. Despite efforts to provide digital solutions like e-wallets to bypass these fees, the manipulation persists, affecting over half of Gaza’s population amid severe food insecurity and inflation. Some experts argue that aid agencies should have been more transparent about the challenges and costs associated with these transactions, as the fees are tantamount to extortion. The ongoing conflict and lack of a functional banking system exacerbate the crisis, prompting calls for more effective management and oversight of aid distribution in Gaza.

Hamas exploits its control over Gaza to siphon off financial aid meant for civilians, using a network of merchants and crime families to establish a shadow banking system. This manipulation allows Hamas to extract significant financial gains from aid money sent by U.N. organizations.

Each month, international organizations such as the World Food Programme and UNICEF send approximately $39.66 million into the Gazan economy, with the aid reaching around 60% of Gaza’s households. However, the conversion of digital funds into cash involves hefty fees, with recipients losing 20% to 35% of their aid in the process.

The aid system's manipulation has led to widespread frustration among Gazans, who face high fees when converting digital funds to cash. This issue is compounded by severe food insecurity and high inflation rates, which have reached 91% and 118%, respectively, as of January 2024.

Efforts to mitigate these challenges include UNICEF's introduction of digital cash payments via e-wallets, which aim to eliminate the need for cash conversion and associated fees. Despite this, the manipulation of aid funds continues, with many traders refusing digital app funds and forcing customers to convert them into cash.

Experts have criticized aid agencies for not being transparent about the challenges and costs of aid distribution in Gaza, arguing that the high fees amount to extortion. Calls have been made for more effective oversight and management of aid distribution to prevent further exploitation by Hamas.

Israel's Foreign Minister has proposed measures to disrupt Hamas's financial network, such as canceling the circulation of certain currency bills in Gaza. However, technical and feasibility issues have stalled these efforts.

The humanitarian crisis in Gaza remains dire, with more than 1.8 million people facing extreme food insecurity, including a significant number of children. UNICEF's cash transfer program aims to provide essential survival items, but the scale of need far exceeds current aid provisions.