International groups target cryptocurrency-funded terrorism

September 20, 2018
Chris Wheal

A global anti-money laundering organisation is close to launching a worldwide set of standards that will close loopholes that currently allow cryptocurrencies to find their way anonymously into the hands of criminals and terrorists.

Financial Action Task Force to launch global standards on anti-money laundering

Marshall Billingslea, president of the Financial Action Task Force on Money Laundering (FATF), said from the group’s Paris headquarters on Wednesday the group would establish a series of standards in October to close these gaps and make it far more difficult for criminals and terrorist groups such as Islamic State to use virtual currencies.

“It is essential that we establish a global set of standards that applied in a uniform manner,” Billingslea said.

Islamic State

He noted that Islamic State used bitcoin and other digital tokens to fund terrorists in Syria, illegally distributing the cryptocurrency after publishing instructions on Twitter on how to use it.

Current anti-money laundering standards depend on the strictness of the individual domestic regulatory authorities that impose them – described by Billingslea as “a patchwork quilt or spotty process, creating significant vulnerabilities for both national and international financial systems.

In October, FATF members will establish which existing standards can be updated effectively to address the use of digital assets in criminal activities. It will then revise the methodology used to implement them to form a new series of standards that will take effect immediately.

Europol report

Meanwhile, a new report from Europol‘s cybercrime unit, published on 18 September found that bitcoin remained the most popular digital currency for illicit uses, although its share was dropping as cryptocurrencies that guarantee more anonymity, such as zcash and monero, rose in popularity.

“Cryptocurrencies represent a source of opportunity for terrorist groups, allowing them to move funds across borders while avoiding the regular banking scrutiny,” Europol’s report found.

It added, however, that the use of cryptocurrencies by terrorist groups had only involved low-level transactions: “Their main funding still stems from conventional banking and money remittance services.”

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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