Argument of Criminal Money is no Longer Relevant as Terrorists Turn Away From Crypto
According to a testimony made today at a House Financial Services Committee hearing, foreign terrorist groups such as al-Qaeda and ISIS have failed at frequently trying to raise money for funding their criminal and anti-social operations using cryptocurrencies.
While speaking in front of Congress today at a House Financial Services Committee hearing, director of analysis for the Foundation For Defense of Democracies Center on Sanctions and Illicit Finance Yaya Fanusie commented that foreign terrorist organizations failed after frequently trying to fund their anti-social operations via virtual currencies like Bitcoin, Ethereum, and Litecoin.
"Fanusie further elaborated that "cold hard cash is still king" for terrorists, due to how easy it is to hide money and keep funding anonymously."
The expert on illicit financial transactions pointed out an example of a failed 2016 online campaign that saw only two total contributions being made to the Iraq-based Mujahideen Shura Council (MSC). The two transactions only amounted to roughly $500.
Fanusie further elaborated that "cold hard cash is still king" for terrorists, due to how easy it is to hide money and keep funding anonymously. Money laundering is a key concern around cryptocurrencies, especially privacy coins which can keep senders and receivers anonymous. However, terrorists also need to spend raised funds on various goods and supplies, often conducting transactions in isolated locations with unreliable technology infrastructure. In such instances, the advanced technology powering cryptocurrencies becomes a hindrance for terrorists.
Congress was cautioned by Fanusie that crypto-based fundraising campaigns could eventually become a successful means of funding their operations, suggesting that all U.S. government agencies that focus their investigations on terrorist funding should better understand the ins and outs of cryptocurrency transactions for a deeper understanding of the issue.
"By preparing now for terrorists' increasing usage of cryptocurrencies, the U.S. can limit the ability to turn digital currency markets into a sanctuary for illicit finance," Fanusie told Congress.
Fanusie also warned Congress of the potential risks involving money laundering in relation to the above-mentioned privacy tokens, such as Dash, Monero, or Zcash that allow both parties to transact while staying anonymous. He explained that although larger exchanges like Bittrex, Gemini, and Coinbase have strict anti-money laundering policies, other exchanges are far more neglectful and could pose a considerable risk.
While terrorist organizations struggle to raise funds in form of cryptocurrencies, the rogue nations that often give shelter to such organizations are embracing the new technology. For instance, Iran is a nation with lots of sanctions imposed on it and has been dubbed as "Axis of Evil" by US president. Iran has been considering launching its own national virtual currency backed by its fiat currency, for the sake of bypassing US-led sanctions against the country. Another "Axis of Evil" nation, North Korea, has also been said to earn approximately $15 to $200 million by mining and selling cryptocurrencies like Bitcoin and Monero, as per the statement of a former NSA cybersecurity official.