The Rise of Digital Currencies in Terrorist Financing: A Growing Concern

Terrorist organizations operating in Syria, particularly those affiliated with the Islamic State (ISIS) and al-Qaeda, have been increasingly using digital currencies to raise, move, and obscure funds. This trend highlights the need for policymakers, practitioners, and academics to better understand how terrorist organizations exploit digital currencies.

Digital Currencies as a Means of Funding Terrorist Activities

The use of digital currencies by terrorist organizations has become more prevalent due to the difficulty of sending funds through traditional channels. Law enforcement and financial institutions have increased scrutiny on transactions, making it harder for terrorists to move money undetected.

Examples of Digital Currency Use in Syria

• Network of Tobacco Shops: A network purchased cryptocurrency coupons worth 10 to 150 euros ($11 to $165) from tobacco shops in France, which were then redeemed by beneficiaries in Iraq and Syria through encrypted text messages. This allowed facilitators to convert the cryptocurrencies into cash, with hundreds of thousands of euros being supplied via this network.
• Sending Funds to Detainees: Digital currencies like Bitcoin and Monero have been used to send money to Islamic State detainees held in facilities in Syria, particularly those in the northeastern part of the country. Individuals often use these funds to help detainees escape or improve their living conditions.

Online Crowdfunding Campaigns: A New Route for Terrorist Financing

Online crowdfunding campaigns have been used to raise funds for Islamic State detainees, often with a focus on security and vetting potential donors. This highlights the need for policymakers and practitioners to develop effective strategies to disrupt these activities.

Recommendations

To address this growing concern, policymakers, practitioners, and academics should:

• Improve Understanding of Digital Currency Use: Better comprehend how terrorist organizations exploit digital currencies to disrupt their activities.
• Develop Effective Strategies: Create strategies to prevent the use of digital currencies for terrorist financing.
• Enhance Collaboration: Foster collaboration between law enforcement, financial institutions, and policymakers to share information and best practices.