Recently several regulatory agencies and financial institutions have taken steps to prevent crypto-currencies from funding terrorism. While some experts claim there isn’t much evidence linking terrorism to the crypto-world, others say the risks are there. For instance, Congress introduced the “Homeland Security Assessment of Terrorists Use of Virtual Currencies Act” in May of 2017. In January of 2018, the House of Representatives introduced the “Financial Technology Innovation and Defense Act“, and six months later the House proposed the “FinCEN Improvement Act of 2018“. The only one of those bills to pass any muster was the Virtual Currencies Act introduced in 2017. It passed the House as is.

 

Fears That Terrorists Could Use Crypto-currencies

A crypto-craze has swept through the tech world, and the tide only seems to be rising. Some experts cast doubt on any alleged link between terrorism and crypto-currencies, and that sentiment is echoed in a study by British intelligence research firm, the Royal United Services Institute (R.U.S.I.). David Carlisle, an independent consultant with R.U.S.I., said that “treating crypto-currencies as an exceptional threat creates the misleading impression that more conventional financial products are not already equally, or more, vulnerable to terrorist exploitation.” Yet some experts say terrorists could use digital currencies to move money from place to place. Some intelligence analysts see it as a reality that has already begun, with several suspicious transactions having already been detected. Moreover, many attribute their stealth to crypto-currencies’ seemingly anonymous nature.

Indeed, one could say seemingly anonymous, for the anonymity that blockchain promises can be misleading. While someone can do business using bitcoin without directly identifying themselves, any such transaction could still be traced to their bitcoin address. Since transactions are permanently recorded in a blockchain ledger, it wouldn’t be difficult for a user’s identity to be compromised. However, a new batch of crypto-currencies called altcoins was designed to fix that problem. Monero, for instance, protects the user’s privacy with such cryptographic methods as ring signatures and stealth addresses. In fact, ex-CIA agent Yaya J. Fanusie recently announced that terror groups have used bitcoin, but now have veered over to altcoins like monero, verge and DASH. While terrorists may conduct digital transactions on an everyday basis one day, he admits that “most terrorists particularly those operating on jihadist battlefields inhabit environments that are not currently conducive to crypto-currency use.”

Bitcoin Used to Purchase Weapons

Crypto publication Cointelegraph cites former arms dealer Roman Nechaev’s claim that only about five to seven percent of illegal arms sales are done in bitcoin, and larger transactions are impossible mainly because withdrawing the cryptocurrency and exchanging it for cash can be difficult. “Eighty percent of transactions are paid for in cash,” he said. Such statements downplay articles found in such publications as online Israeli magazine Haaretz. Those articles assert that crypto-currencies have helped bankroll terrorists groups like ISIS and al-Qaeda. Haaretz discovered, for instance, a pro-ISIS blog named “Bitcoin and the Charity of Violent Physical Struggle” that featured one Taqi’ul-Deen al-Munthir, a man linked to ISIS who said that funding of that group needs to be done outside traditional western channels. “This system (bitcoins),” he wrote, “has the potential to revive the lost (Islamic tradition) of donating to the mujahedeen (holy warriors).”

Some terrorism sympathizers who’ve said they’d like to see more bitcoin funding for terrorist operations have eventually ended up acquiring funds to pay for hosting servers and components for their digital infrastructure. In fact, a Europol study called the Internet Organized Threat Assessment found that while some terrorists have carried out crypto-funded activities, including a social media campaign called Sadaqah that sought recruits for their war in Syria, they’ve used only traditional currency for attacks in Europe. The report also said that crypto-currencies have been used by terrorists, but only for low-level activities.

 

Countries to Use Blockchain to Fight Terrorism

At a recent summit in Singapore that was attended by philanthropists, senior diplomats, business leaders, financial and blockchain experts, it was announced that countries in the region would use blockchain technology to fight terrorism. The event, called the Locus Chain World Summit, promoted the expansion of “Locus Chain” blockchain technology within a wide gamut of industries to help guarantee a greater sense of world justice. The summit also sought transparency in healthcare services, financial transactions, and educational and charity activities. The founder of the Locus Chain Foundation, Sejung Kim, said that “Locus Chain technology can help countries fight terrorism” and help “identify which criminal has a criminal record or engaged in criminal acts.”

The U.S., meanwhile, has been adamant about fighting terrorism through whichever means necessary, including technology. Government officials, in fact, have criticized the tech world for not doing enough. That criticism, however, is belied by a growing trend among startups that could aid, at least indirectly, in the war on terror. Austin-based Factom, for instance, is negotiating with Honduras to help prevent real estate corruption by providing it with blockchain-based land title services. Other countries like Sweden and Georgia are involved in similar blockchain deals. Furthermore, the Isle of Man and UK-based Pythia have linked up to form a blockchain registry to monitor the island’s crypto-currency companies.

For more information on blockchain and how it can impact the international community’s war on terror, please contact us.

Majid Abai – April 2019 – Los Angeles

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About The Author:

Majid Abai is Managing Director of Concepts Rise (www.ConceptsRise.com), a High-Technology and Innovation Consultancy based in Los Angeles, CA, USA. With over 30 years of experience in supporting US and global organizations, Mr. Abai focuses on strategic and tactical approach to use of innovation and technology to increase revenues and reduce costs for organizations. Majid could be reached at 424-320-0524 or via email at majid.abai@ConceptsRise.com.