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A report released by the Philippine Institute for Peace, Violence and Terrorism Research (PIPVTR) reveals that Islamic State (IS) terrorist groups in Southeast Asia have recently made their first transactions using cryptocurrencies.
According to the report presented on May 20, the funds are helping to finance regional terrorist groups such as Jemaah Ansharut Dalauh and Mujahideen Eastern Timur in Mindanao.
Laundromat
The report detailed the use of cryptocurrencies by a money laundering operation, which consisted of two phases according to the PIPVTR. The first was the place where crypto assets of “suspicious origin” were piped through unidentified exchanges. This “deliberately obfuscated” transaction and the origin of the coins, making it more difficult to track.
PIPVTR detailed the following regarding phase two, where the money laundering cycle ended:
“The second phase refers to an exchange of these cryptocurrencies into fiat money which, then, returns the funds to the fiat money cycle. In crypto-only exchanges, cryptocurrencies can be exchanged with each other. “
The study warns that terrorist groups in Southeast Asia can trade cryptocurrencies outside the oversight of regulatory institutions, and this raises concerns, given the free legal framework.
The institute asks the authorities to implement anti-money laundering and counter-terrorism procedures for cryptocurrencies because the system is fragile and they accuse the government of losing control of financial flows.
Concerns about “anonymous crypto assets”
The report cited the 2017 Marawi Siege case, in which there were unconfirmed reports of private remittances and cryptocurrency cash couriers helping to finance the terrorist groups involved. These reports were “largely ignored” by the authorities.
PIPVTR has also shown concern over the increased use of “anonymous crypto-assets” like Monero (XMR), which make it easier to hide illegal activities.
Cointelegraph reported in March of a US ISIS supporter who was given a 13-year sentence for funding the terrorist organization using cryptocurrencies, including Bitcoin, in 2017.
However, forensic blockchain firm Chainalysis today released a report exposing numerous stories about terrorist groups using cryptocurrencies. The report states that many reports on the subject were mistreated or based on incorrect information.
