The propagandist who he called himself Azym Abdullah did not need a lot of money to create a website for ISIS that would broadcast horrific beheading videos. What he needed was secrecy, so in 2014 he devoted himself to cryptocurrency.
He paid a little over 1 bitcoins, about $ 400 at the time, to register the domain name in Iceland and host it on servers around the world. His site solicited donations from visitors to help pay for maintenance. These, too, were in bitcoin.
Sending donations in this way allowed their donors to protect their identity behind a series of letters and numbers, a favored technique that makes it more difficult for banks, law enforcement and the Treasury Department to The United States will track and curb the flow of money that supports terrorism.
Abdullah’s reliance on bitcoin is documented in a 2017 Treasury Department intelligence assessment, which BuzzFeed News received as part of a document cache that includes internal emails and cryptocurrency reports. The intelligence assessment also reveals evidence of nine other incidents in which supporters of terrorism used cryptocurrencies to fund their activities, from buying plane tickets to spreading 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 information about the U.S. government’s ongoing, sometimes backward, battle to counter the use of cryptographic technology to promote terrorism and crime, as well as the variety of cryptographic ways, with its alleged anonymity. and ease of transfer worldwide. it can be used for nefarious purposes.
In 2016, for example, analysts at the U.S. Treasury Department’s (FinCEN) Financial Crime Enforcement Network sounded the alarm over so-called mixers: companies that split cryptocurrency transactions into even smaller pieces to shield plus the identity of the owner. When these companies operate in the United States, they are supposed to register with FinCEN and provide information about suspicious transactions and customers. But the report, which is among the documents received by BuzzFeed News, found that “of the 30 largest mixing services, none have been registered … nor has there been 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 $ 60 million mixers for not “collecting and verifying customer names, addresses and other identifiers in more than 1.2 million transactions.” These transactions, the government found, helped criminals involved in illegal narcotics, fraud, counterfeiting and child exploitation, as well as neo-Nazi groups and other white supremacist groups. FinCEN dit tracked transactions worth more than $ 2,000 from the mixer to a website called Welcome to Video which housed child sexual abuse materials.
Documents reviewed by BuzzFeed News trace Treasury Department concerns about cryptographic technology at least ten years ago. Now FinCEN is trying change your rules so any company that deals with cryptocurrencies will need to get clearer information about their customers and their transactions.
FinCEN and the Justice Department did not respond to messages seeking comment.
Yaya Fanusie, a former CIA analyst and expert on the national security implications associated with cryptocurrencies, said he believes U.S. officials are ahead of their European counterparts in addressing the issue. But, like other experts contacted by BuzzFeed News, he said he considers a new class of financial investigators necessary to let the cryptocurrency be misused by terrorists, drug traffickers and other criminals.
“For people on the ground, crypto is harder to understand when compared to more traditional methods of money laundering,” said Fanusie, now a senior member of the Center for a New American Security. “Only recently are skills and resources being deployed at the field level.”
As regulators and the industry adjust slowly, the appeal of cryptography remains strong, and terrorists find 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 confiscated millions of dollars as part of the “largest seizure of cryptocurrency accounts by terrorist organizations.”
One of the accusations described how al-Qaeda and affiliated groups conducted a money laundering operation soliciting donations in encryption through social media accounts. They then used this network to make donations “to promote their terrorist goals.” One of the networks linked to al-Qaeda tracked by the government received more than 15 bitcoins, worth thousands of dollars, in 187 transactions between February 5, 2019 and February. 25 of 2020.
Cryptographic technology is pressing the same weaknesses of the financial system first explored by FinCEN files, a global project by BuzzFeed News and the International Consortium of Investigative Journalists in late 2020. News organizations found that major Western financial institutions allowed gross money to go around the world in the eyes of northern authorities -American. 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 counter crime.
In her candidacy hearing before the Senate Finance Committee, the new Secretary of the Treasury, Janet Yellen dit 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. and international financial systems.” .
Cryptocurrency is much easier to move than other financial instruments, allowing criminals to quickly move assets to different parts of the world, an advantage when trying to avoid scrutiny by U.S. law enforcement. or when detection seems imminent.
“You can flee to jurisdictions or entities that don’t care,” said Pawel Kuskowski, CEO of Coinfirm, a cryptocurrency analysis and compliance company. “It’s a mechanism designed to protect themselves knowing they will receive illicit funds.” “
Thousands of different virtual currencies are currently traded in a still-evolving market marked by secrecy. Typically, cryptocurrency owners acquire these funds on a stock exchange and store them in virtual wallets with addresses that are only designated by unique arrangements of letters and numbers, another layer of anonymity that obscures who the real owner of the funds is.
Just as banks are responsible for controlling the transactions of their customers, cryptographic exchanges have legal obligations to comply with. They even send the government reports of suspicious activity or SAR, the same forms that banks use when they come across a transaction that suggests criminal activity.
But some exchanges backfire on FinCEN’s proposal for stricter regulations, describing the requirements as heavier than the banking industry faces. Square, the payment company founded by Twitter CEO Jack Dorsey, and investment firms like Andreessen Horowitz, have also said the new rules would be cumbersome and could violate clients ’privacy rights.
The Electronic Frontier 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 sensitive financial data.” ●