The propagandist that his name was Azym Abdullah he didn’t need a lot of money to set up a website for ISIS that broadcast terrible beheading videos. What he needed was secrecy, so in 2014 he turned to cryptocurrency.
He paid a little over 1 bitcoin, about $ 400 at the time, to register the domain name in Iceland and receive it on servers around the globe. Their site asked visitors to donate to help pay for maintenance. Those, too, were in bitcoin.
Sending donations in this way has allowed its donors to protect their identity behind a chain of letters and numbers – a favored technique that makes it more difficult for banks, information authorities and the Treasury Department. of the United States to monitor and slow down the flow of money that supports terrorism.
Abdullah’s confidence in bitcoin is documented in a 2017 Treasury Department intelligence assessment, which was received by BuzzFeed News as part of a cache of documents including internal emails and reports on the cryptocurrency. The intelligence assessment also reveals evidence of nine other incidents in which terrorist supporters have used cryptocurrency to fund their activities, from the purchase of airline tickets to the dissemination of a political website to the organization of trips to Syria. .
The vast majority of cryptographic transactions are used for legitimate purchases. But the documents provide an insight into the U.S. government’s ongoing, sometimes delayed, battle to counter the use of crypto technology to promote terrorism and crime, as well as the variety of ways it encrypts – with its presumed anonymity and ease of transfer around the globe – can be used for nefarious purposes.
In 2016, for example, analysts at the U.S. Treasury Department in the Financial Crimes Enforcement Network, or FinCEN, launched alarms about so-called mixers – companies that split crypto transactions into smaller pieces. small to further protect the identity of the owner. When those companies operate in the United States, they are supposed to register with FinCEN and provide information on suspicious customers and transactions. But the report, which is part of documents received by BuzzFeed News, found that “of the 30 largest mixing services, none have registered … or shown any evidence of a compliance program.”
It was not until almost four years later that the government took action. Last year, FinCEN fine one of the mixers $ 60 million for failure “to collect and verify customer names, addresses and other identifiers on more than 1.2 million transactions.” These transactions, the government found, helped criminals involved with illegal narcotics, fraud, counterfeiting, and exploitation of children, and neo-Nazis and other white supremacist groups. FinCEN he said it tracked transactions of more than $ 2,000 from the mixer at a so-called website Welcome to Video who welcomed child sexual abuse materials.
The documents examined by BuzzFeed News represent the Treasury Department’s concerns regarding crypto technology for at least 10 years. FinCEN is testing now change its rules so that any company that deals with cryptocurrency should have clearer information about its customers and its transactions.
FinCEN and the Justice Department did not respond to messages seeking comment.
Yaya Fanusie, a former CIA analyst and expert on the implications of national security associated with cryptocurrencies, said he believes U.S. officials are ahead of their European counterparts to deal with the problem. But, like other experts contacted by BuzzFeed News, he said he sees the need for a new class of financial investigators to prevent cryptocurrency from being abused by terrorists, drug traffickers and other criminals.
“For people on the ground, cryptography is harder to understand when compared to more traditional means of money laundering,” said Fanusie, now a former partner at the Center for New American Security. “Only recently, skills and resources have been put in place at the field level.”
As regulators and industry slowly adapt, the attraction of the cryptocurrency remains strong, with terrorists finding that they can use it to solicit donations to fund operations. Last August the Department of Justice announced that an investigation conducted in cooperation with the Treasury Department had seized millions of dollars as part of the “largest seizure ever made of cryptocurrency accounts by terrorist organizations.”
One of the accusations he described how Al-Qaeda and affiliated groups handled a money laundering operation that demanded crypto donations on social media accounts. They then used that network for donations “to further their terrorist purposes.” One of the Al Qaeda-linked networks tracked by the government received more than 15 bitcoins, worth thousands of dollars, in 187 transactions between February 5, 2019 and February 25, 2020.
Crypto technology presses the same weaknesses into the financial system first explored by the Lime FinCEN, a global project of BuzzFeed News and the International Consortium of Investigative Journalists in late 2020. News organizations have found that major Western financial institutions have allowed gross money to run around the globe in view of the American authorities. 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 exploit crime.
At her nomination hearing before the Senate Finance Committee, Janet Yellen, incoming Treasury Secretary 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 finance terrorism, facilitate money laundering, and support malicious activities that threaten U.S. national security interests and the integrity of U.S. financial systems and international “.
Cryptocurrency is much easier to move than other financial instruments, allowing criminals to quickly move assets to different parts of the globe – an advantage when trying to avoid scrutiny by law enforcement. US or when detection seems imminent.
“You can escape jurisdiction or entity that doesn’t matter,” said Pawel Kuskowski, CEO of Coinfirm, a cryptocurrency analysis and compliance firm. . “
There are currently thousands of different virtual currencies that are exchanged in a market that is constantly evolving marked by secrecy. Typically, cryptocurrency owners acquire these funds in an exchange and store them in virtual wallets with addresses that are designated only by unique arrangements of letters and numbers – another layer of obscure anonymity that actually holds the funds.
As banks are responsible for tracking the transactions of their customers, crypto exchanges have legal obligations to respect. They also sent the government reports of suspicious activity, or SAR, the same forms that banks use when they find a transaction that suggests criminal activity.
But some exchanges are pushing against FinCEN’s proposal for stricter regulations, describing the requirements as more onerous than what the banking industry does. Square, the payments company founded by Twitter CEO Jack Dorsey, and investment firms like Andreessen Horowitz have also said the new rules will be cumbersome and could violate clients ’privacy rights.
The Electronic Border Foundation wrote in a public comment letter earlier this year that it thought the regulations proposed by FinCEN “would undermine the civil liberties of cryptocurrency users” and “give the government access to and finds sensitive financial data “. ●