Propaganda person claiming to be that Azym Abdullah didn’t need a lot of money to set up a website for ISIS that played out creepy beheadings. What he needed was secrecy, so in 2014, he switched to cryptocurrency.
He paid more than 1 bitcoin, about $ 400 at the time, to register a domain name in Iceland and host it on servers around the globe. His website has asked visitors for contributions to help pay for maintenance. Those things are also in bitcoin.
Sending donations that way allows his sponsors to shield their identities behind a string of letters and numbers – a popular technique that is causing banks, law enforcement and it is difficult for the US Treasury Department to track and slow the flow of money to support terrorism.
Abdullah’s reliance on bitcoin was captured in a 2017 Treasury Department intelligence review, received by BuzzFeed News as part of a document cache that includes internal emails and reports on cryptocurrencies. The intelligence review also revealed evidence of nine other incidents in which terrorists used cryptocurrencies to fund their operations, from buying air tickets to defeating a major website. to arrange a trip to Syria.
The vast majority of cryptocurrency transactions are used for legitimate purchases. But the documents provide insight into the ongoing, sometimes lagging, war of the US government against the use of cryptocurrency technology to promote terrorism and crime, as well as Many ways that cryptocurrencies – with supposed anonymity and easily transferred globally – can be used for nefarious purposes.
In 2016, for example, analysts at the U.S. Treasury Department’s Financial Crime Enforcement Network, or FinCEN, issued warnings about so-called scammers – companies that break down transactions. cryptocurrency into smaller pieces to protect the identity of the owners. When such companies are operating in the US, they must register with FinCEN and provide information about suspicious clients and transactions. But the report, among the documents BuzzFeed News received, found “out of the 30 largest mixing services, none have signed up… or showed any evidence of a compliance program. capital ”.
It was not until nearly four years later that the government made a move. Last year, FinCEN fined one of the guys scrambled $ 60 million for not “collecting and verifying customer names, addresses and other identifiers on more than 1.2 million transactions”. Those transactions, the government discovered, aided in illicit drug-related crimes, fraud, counterfeiting and child exploitation as well as German neo-fascists and supremacy groups. other white skin. FinCEN to speak it tracked over $ 2,000 worth of transactions from the mixer to a website called Welcome to Video has archived child sexual abuse material.
Documents examined by BuzzFeed News track the Finance Department’s interest in crypto technology at least 10 years ago. FinCEN is currently trying its rules change for any company to trade cryptocurrency will have to have clearer information about customers and their transactions.
FinCEN and the Justice Department did not respond to messages seeking comment.
Yaya Fanusie, former CIA analyst and expert on national security impacts related to cryptocurrencies, said he believes US officials are ahead of their European counterparts in solving the problem. this subject. However, like the other experts contacted by BuzzFeed News, he says he sees a need for a new layer of financial investigation to prevent cryptocurrencies from being terrorized, trafficking people and other criminals. take advantage.
Fanusie, now a senior fellow at the New Center for US Security, said: “For industry insiders, cryptocurrency is more confusing when compared to more traditional means of money laundering. “Only recently have skills and resources been deployed at the field level.”
As regulators and industry slowly adjust, the attractiveness of cryptocurrencies remains strong, with terrorists realizing they could use it to raise donations for operations. Last August the Ministry of Justice announced that an investigation conducted in cooperation with the Ministry of Finance seized millions of dollars as part of the “largest ever seizure of a terrorist organization’s crypto account ever since.” . “
One of the indictment described how al-Qaeda and its affiliated groups conduct a money laundering operation aimed at attracting cryptocurrency contributions through social media accounts. They then use the network to make donations “to continue their terrorist goals.” One of the government-tracked al-Qaeda-affiliated networks received more than 15 bitcoins, worth thousands of dollars, in 187 transactions between February 5, 2019 and February 25, 2020.
Cryptocurrency technology is addressing similar weaknesses in the financial system first discovered by FinCEN file, a global project by BuzzFeed News and the International Association of Investigative Journalists in late 2020. News organizations find that the major Western financial institutions allow dirty money to spread globally in the clear view of the US authorities. Like traditional currencies, bitcoin and other cryptocurrencies can test financial institutions’ ability to track transactions and prevent crime by U.S. authorities.
At her nomination hearing in front of the Senate Finance Committee, the upcoming Treasury Secretary Janet Yellen to speak that cryptocurrencies have the potential to “improve the efficiency of the financial system”.
“At the same time,” she said, “it can be used to finance terrorism, aid money laundering, and assist bad activities that threaten US national security interests and system integrity. US and international financial system. ”
Cryptocurrencies are much easier to move than other financial instruments, allowing criminals to quickly transfer assets to different regions across the globe – an advantage when trying to avoid agency scrutiny law enforcement or when the discovery appears imminent.
Pawel Kuskowski, CEO of Coinfirm, a cryptocurrency analytics and compliance firm, said: “You could run away to jurisdictions or uninterested institutions. . “
There are thousands of different cryptocurrencies currently traded in a growing market marked with cryptocurrencies. Typically, crypto holders get these funds on an exchange and store them in virtual wallets with addresses specified only by a unique arrangement of letters and numbers – a layer Other anonymity obscures who actually owns the money.
Just as banks are responsible for overseeing their customers’ transactions, crypto exchanges have legal obligations to meet. They even send the government reports of suspicious activity, or SAR, the same forms that banks use when they come across a transaction that suggests criminal activity.
But some exchanges are opposing FinCEN’s proposal for stricter regulations, describing the requirements as tougher than what the banking industry faces. Square, a payments company founded by Twitter CEO Jack Dorsey and investment firms like Andreessen Horowitz also said the new rules would be very heavy and could violate customer privacy.
The Electronic Frontier Organization wrote in a public comment earlier this year that it thought FinCEN’s proposed regulations would “undermine the civil liberties of crypto users” and “Provides government access to a wide range of sensitive financial data.” ●