Terrorists Using Virtual Currencies – a Growing Threat

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Virtual currencies have the potential for widespread use by terrorists, but so far the limited scale of their real world adoption means it remains unrealized, said a senior anti-money laundering Treasury Department official. This according top Fierce Homeland Security.

The crux of oversight by the Treasury’s Financial Crimes Enforcement Network unit into virtual currencies is the point at which they’re exchanged into legal currencies such as dollars, acknowledged David Cohen, Treasury undersecretary of terrorism and financial intelligence. He spoke at the New York City headquarters of financial newswire Bloomberg News.

These days, illicit actors such as terrorists or those evading official sanctions can’t operate in the real world with a digital-only currency. They need real-world currencies to pay salaries, for travel and safehouses, Cohen said. The volatility of digital currencies’ value against legal currencies is also a limiting factor.

iHLS – Israel Homeland Security

The future could easily see greater adoption among terrorist organizations, especially should virtual currencies become pervasive enough that illicit actors wouldn’t need to convert them back into legal tender – and that would likely trigger greater degrees of oversight.

He also warned virtual currency exchanges not registered with FinCEN that they carry the risks of civil and criminal penalties for failing to do so.