Terrorism finance: experts worry ISIS already using Bitcoin

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Financial and terror experts are concerning about the ability to move cash around national borders could help ISIS fund attacks in the West. This seems to be the MO adopted by an Al Qaeda group, which allegedly funded the attacks in France back in January.

Bitcoin fans may not benefit from the government’s attention. Nevertheless, they should be flattered: it means the technology they are developing is powerful stuff.

According to Defense One, at a recent forum that brought together government officials and bitcoin entrepreneurs to discuss the future of the cryptocurrency, praises for the protocol’s efficiency mingled with law enforcement’s concerns over it. Jennifer Shasky Calvery, head of the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN), which is the agency in charge of fighting money laundering and terrorist finance, voiced her concern that powerful payment technologies could facilitate ’rogue actors’.

Last summer, Sky News reported that one pro-ISIL blog discussed using bitcoin to fund the militia’s attempts to impose its extreme view of Islamic law on Syria and Iraq. It’s not clear yet if bitcoin is, or ever will be, a significant part of the group’s fundraising. ISIS current funding is largely reliant on cash from hostage ransoms and illegal sales of crude oil. That said, the very ability to move cash across national borders could help the organization finance attacks in the West. An Al Qaeda group in Yemen apparently funded the Charlie Hebdo attacks in France the same way.

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Bitcoin – transparent in its reporting of how much got transferred and when, but lacking the intermediaries to report suspicious activities the way the regulated banking system does – provides a lot of cover for anyone who wants to move money around without triggering the usual alarm bells associated with giant transfers of cash.

“If you want to be a part of the US financial system, if you want to be part of the global financial system, that’s no small thing,” Calvery said. “When you start talking about global point-to-point transactions and pseudo-anonymity and instantaneous movement of value over borders – this poses real risks as well.”

In other words, while it’s common for start-ups to see themselves as potential world-changers, Calvery said that bitcoin entrepreneurs might be underestimating what their companies are capable of doing.

Washington lawyer Carol Van Cleef, who represents financial services firms on enforcement matters, observed, in the framework of the Foreign Affairs-hosted forum that “the first adopters of new payments systems, without a doubt, are the criminals.” Cryptocurrency entrepreneurs should be aware, if they are not already, of the numerous instances of frauds that had already been uncovered at major nodes in the financial ecosystem.

As companies which use bitcoin technology continue to push into the mainstream, they are getting better at protecting their customers as well as at working with regulators. Calvery notes that the technological savvy that inspires entrepreneurs in financial innovation also helps them in doing a better job of cooperating with the government.