The role of Bitcoin in terrorism is of concern to U.S. authorities

Propaganda nor himself Azym Abdullah did not need much money to create a website that would broadcast harsh videos of beheading ISIS. What he needed was a secret, so in 2014, he went to the cryptocurrency conference.

It cost a little more than Bitcoin 1, then about $ 400, to register the domain name in Iceland and host it on servers around the world. His site asked visitors to make donations to help pay for maintenance. These were also in bitcoin.

Sending donations in this way allowed donors to protect their identity behind a string of letters and numbers, a technique that is making it difficult for banks, law enforcement and the U.S. Treasury Department to track and slow the flow of money that protects terrorism.

Abdullah’s confidence in bitcoin is documented in the 2017 Department of the Treasury’s intelligence assessment as part of a cache of documents containing emails and reports about the cryptocurrency received by BuzzFeed News. The intelligence assessment also shows evidence of nine other incidents where terrorists used cryptocurrency to fund their activities, from buying plane tickets to dismantling a political website to arranging trips to Syria.

The majority of crypto transactions are used for legitimate purchases. The document provides information on the US government’s ongoing and sometimes delayed fight to combat the use of cryptographic technology in the promotion of terrorism and crime, as well as the different ways in which cryptography – with its supposed anonymity and ease of transfer around the world. can be used for harmful purposes.

In 2016, for example, analysts at the U.S. Department of the Treasury’s Financial Crimes Network or FinCEN raised alarms about so-called mixers – companies that split cryptographic transactions into smaller pieces to further protect the owner’s identity. When these companies operate in the US, they must register with FinCEN and provide information on suspicious customers and transactions. But the report, among documents received by BuzzFeed News, found that “none of the 30 largest mixing services have registered … or shown evidence of a compliance program.”

Almost four years later until the government took action. Last year, FinCEN fine one of the mixers failed to “collect and verify $ 60 million in customer names, addresses and other identifiers in more than 1.2 million transactions”. The government found these transactions to help criminals involved in illegal narcotics, fraud, counterfeiting and child exploitation, as well as neo-Nazi groups and other white supremacist groups. FinCEN he said he tracked more than $ 2,000 transactions from the mixer to a website called Welcome to the video he received child sexual abuse materials.

The documents analyzed by BuzzFeed News show that the Department of the Treasury has been back on crypto technology for at least 10 years. FinCEN is now trying change its rules so any company involved in cryptocurrency will need to get clearer information about their customers and their transactions.

FinCEN and the Department of Justice have not responded to the messages.

Yaya Fanusie, a former CIA analyst and expert on the implications of cryptocurrency-related national security, said she believes U.S. officials are ahead of European members in addressing the issue. But, like other experts who have contacted BuzzFeed News, he said he sees the need for a new class of financial investigators to stop the misuse of cryptocurrency, drug traffickers and other criminals.

“For people on earth, cryptography is more difficult to understand compared to more traditional means of money laundering,” Fanusie said today at the New American Security Center. “Only recently are skills and resources expanding in the field.”

As regulators and the industry slowly adapt, the appeal of cryptography remains strong, as they have found that terrorists can use it to solicit donations to fund operations. Last August Department of Justice he announced The investigation, in collaboration with the Treasury Department, found millions of dollars as “a horrific hijacking of the cryptocurrency accounts of terrorist organizations.”

One of them accusations described how Al-Qaeda and its affiliated groups carried out a money laundering operation that required donations to the crypto on social media accounts. This network was then used for donations to “promote terrorist purposes.” One of the government-linked Al-Qaeda-linked networks received more than 15 bitcoins, worth thousands of dollars, in 187 transactions from February 5, 2019 to February 25, 2020.

Crypto technology is hitting the same weaknesses in the financial system studied for the first time FinCEN files, A global project by BuzzFeed News and the International Consortium of Investigative Journalists in late 2020. The new institutions found that major Western financial institutions had allowed U.S. authorities to study dirty money around the world. As with traditional currencies, bitcoin and other cryptocurrencies can test the ability of financial institutions to track their transactions and the ability of U.S. authorities to thwart crime.

In a hearing appointed before the Senate Finance Committee, Treasury Secretary Janet Yellen he said this cryptocurrency has the potential to “improve the efficiency of the financial system”.

“At the same time,” he said, “it can be used to fund terrorism, facilitate money laundering, and support evil national security interests and evil activities that threaten the integrity of the U.S. and international financial systems.”

Cryptoconferencing is much easier to move than other financial instruments because it allows criminals to move assets to different parts of the world quickly – an advantage when it avoids U.S. law enforcement scrutiny or seems close to detection.

“You can get away with jurisdictions or entities that don’t care,” said Pawel Kuskowski, CEO of Coinfirm, a cryptocurrency analysis and compliance firm. “Knowing that they will receive illegal funds is a mechanism designed.”

Thousands of different virtual currencies are currently trading in a highly evolving market marked by secrets. Typically, cryptocurrency owners acquire these funds in exchange and store them in virtual wallets with addresses designated only by a few arrangements of letters and numbers – another layer of anonymity that hides who actually owns the funds.

Just as banks are responsible for controlling customer transactions, crypto exchanges have legal obligations. They also send suspicious activity reports or SARs to the government in the same ways they use banks when they encounter a transaction that suggests criminal activity.

But some exchanges are running against FinCEN’s proposal for stricter regulations, saying the obligations are more difficult than the banking industry faces. Square, a payment company created by Twitter CEO Jack Dorsey, and investment firms like Andreessen Horowitz have also said the new rules would be cumbersome and could violate customers ’privacy rights.

The Electronic Frontier Foundation wrote in a public comment letter earlier this year that FinCEN’s proposed regulations “undermine the civil liberties of cryptocurrency users” and that “the government will provide access to sensitive financial data.” ●