Domestic and international terrorist groups rely heavily on financing to operate and carry out terrorist attacks. Terrorist organizations raise funds through several mediums, including money laundering. In recent times, terrorists have also attempted to use the Internet to accept cryptocurrency (i.e., bitcoin) for terrorism financing operations. Do you believe that terrorists will be successful in using cryptocurrency to fund their operations? Why, or why not?
What is Cryptocurrency here is a link: https://cointelegraph.com/bitcoin-for-beginners/what-are-cryptocurrencies
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Cryptocurrency seems to be the wave of the future as far as financial transactions. It provides a level of anonymity to the overall transaction. Cryptocurrency is not regulated because it is not a federally backed reserve note with reporting requirements of incoming and outgoing transactions. “While banks are subject to rules and regulations, with compliance officers supervising all incoming and outgoing transactions, cryptocurrencies allow terrorists to transfer assets without facing questions about the beneficial owner(s) or the transaction’s economic background” (Fabian Maximilian, 2018). Terrorists are now in the process of demanding that ransom fees are to be paid in Bitcoin, the leading cryptocurrency. Then, Bitcoin can be used to purchase weapons and explosives on the dark web which is extremely difficult to trace.
Terrorists will, unfortunately, find a level of success using cryptocurrency because traditional money laundering techniques are becoming less of a viable option with governmental regulations placed on banks. “Hence, as the financing of terrorism activities have become more visible in the formal financial sector and to law enforcement agencies, terrorists have increasingly had to look for alternative methods of raising finance and have turned mainly to criminal activity” (Salami, 2018).
Under the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, two statutes were amended regarding possible criminal activity as it relates to money laundering: the Money Laundering Control Act of 1986 and the Bank Secrecy Act of 1970. These acts provided updated security measures for banks and investment firms. In compliance with the Act, financial institutions are required to verify the identity of every customer that opens an account and to maintain verification of that person or business’ identity.
“In 2019, the Izz ad-Din al-Qassam Brigades (AQB), the military wing of Hamas and a designated terrorist organization, collected money through a website that generated a new Bitcoin address for every donor to send funds to, the first verified example of such technology deployed by a terrorist organization. AQB [has also] advised people to donate while using public Wi-Fi, so their computer’s IP address couldn’t be traced by law enforcement” (Kharif, 2020). To that extent, it seems that the idea of the exchange of virtual currency will affect the financing of terrorism for the immediate future.
Kharif, O. (2020). Crypto Terrorism Funding Grows More Sophisticated. Bloomberg.Com, N.PAG.
Fabian Maximilian, J. T. (2018). Financing terrorism through cryptocurrencies – a danger for europe? Journal of Money Laundering Control, 21(4), 513-519. doi:http://dx.doi.org.libraryresources.columbiasouthern.edu/10.1108/JMLC-06-2017-0024
Salami, I. (2018). Terrorism Financing with Virtual Currencies: Can Regulatory Technology Solutions Combat This? Studies in Conflict & Terrorism, 41(12), 968–989. https://doi-org.libraryresources.columbiasouthern.edu/10.1080/1057610X.2017.1365464