In recent years, the world has set off alarm bells for the use of virtual assets, such as bitcoin, to finance terrorist
activities; however, the firm Chainalysis has confirmed, with typologies in detail, how terrorism financing schemes
have mutated through technology, without yet regulatory clarity to combat such mechanisms.
In a further preview of its annual Cryptographic Crimes report, the U.S.-based firm indicated how cryptocurrencies
have been used by or affiliated with various terrorist organizations to get resources, which is a reason for concern
about the success they have had.
"Unlike social media profiles and bank accounts, authorities often cannot close a cryptocurrency address due to
the decentralized nature of blockchains," the firm said focused on tracking and prevent crimes via virtual assets,
in advance of their report that will be presented in the coming weeks.
"What is particularly worrying is the advances in technical sophistication that have enabled successful campaigns
to finance terrorism using cryptocurrencies," he said.
Clear casesThe firm listed two cases of terrorist organizations with jihadist affinities that managed to raise
resources through virtual asset fundraising campaigns.
The first case that was detailed was the fundraising by the Derna Mujahideen Shura Council, an organization
declared a terrorist by the U.S. State Department with ties to Al Qaeda.
According to Chainalysis, in 2016 this terrorist organization became the first of its kind to launch a public
campaign to donate collective anchoring with cryptocurrencies.
"Explicitly, potential donors were told that the funds they would send would be used to compare weapons. The
campaign was promoted on platforms such as Twitter, YouTube and Telegram, publishing a bitcoin address to
which donors could send funds," the firm said of this event, which sought to gain supporters for Muslims around
the world to join to his cause.
According to estimates from the firm, from 2016 to 2018 that lasted the campaign, this organization managed to
raise cryptocurrencies worth thousands of dollars in more than 50 individual donations. "The average donation
size was $164. The largest donation was less than $2,500 and only two other donations exceeded $1,000."
The other case in which Chainalysis deepened was that of the Ezzeldin al-Qassam Brigades, which is the armed
arm of the terrorist organization Hamás, which in early 2019 began soliciting donations in bitcoin to put together
"one of the largest and sophisticated never seen."
The firm detailed that this terrorist organization carried out three subcampaigns to receive more than 100
donations in bitcoin, thus obtaining resources that, while not for high amounts, the sophistication and success of
the campaign could generate thousands of dollars in the short term.
Chainalysis concluded that terrorist groups have proven to be experts in leveraging new technologies to advance
their agenda, so there must be joint work between private agencies, authorities and the cryptocurrency
community withto close the roads for terrorist organizations to raise funds through these instruments.While this issue has been on the regulatory radar since recent years, it was only at the end of 2019 at the No Money for
Terror conference in Australia, where a number of countries recognized the need to identify and mitigate the risks
of financing terrorism in virtual assets.
GAFI has asked to meet certain standardsFor its part, the International Financial Action Task Force (IFAF) has
been working for months to find greater regulatory clarity regarding the prevention of money laundering and
terrorist financing in the use of virtual assets. In 2019 it adjusted its recommendations in order to identify risks in
these instruments and then mitigate them.
The GAFI, which is the intergovernmental body responsible for issuing standards for combating and preventing
money laundering and terrorist financing, has called on governments to meet certain standards of identification,
registration, oversight and regulation of providers that offer virtual asset services, such as virtual exchange
houses where cryptocurrencies are purchased and sold.
These changes to its recommendations that have been endorsed since mid-2019 have to be implemented by the
agency's member countries, including Mexico, and oversight of its implementation will begin from June this year.
Today, the GAFI organizes forums where it seeks to explain the nature of these changes to its recommendations,
and offers discussion panels between regulators to exchange regulatory experiences in this regard.
On their website, various regulators have shaped their work in this area.