Crypto-financing of terrorism quadrupled in recent years, the UN claims
Mounting evidence suggests that terrorism is increasingly being financed using crypto, according to a UN official.
The prevalence of crypto-financing of terrorist activities may have quadrupled in recent years, Svetlana Martynova said at a recent conference.
The top legal officer at the UN Counter-Terrorism Committee Executive Directorate estimates that 20% of terrorist attacks have been crypto-financed. She reported that these numbers appeared to have increased as scrutiny of the illegal use of cryptocurrencies has intensified.
Criminal activities related to cryptocurrency rose to a record high last year, according to the latest report from Chainalysis. The figure has nearly doubled, from $7.8 billion in 2021, with illegally linked addresses receiving $14 billion in 2021.
Chainalysis highlighted a number of militant organizations that had made efforts to finance their operations with cryptocurrency.
Terrorists abuse crypto
However, Martynova pointed out that cash payments still facilitate the vast majority of terrorism around the world. She also highlighted the use of an informal value transfer system known as hawala. The practice, which involves the use of brokers, follows Islamic principles and is often used in the Middle East.
The UN official explained that terrorists often adapt their collection methods to fit the constraints of their environment. For example, “if they want to collect money from a territory that uses mobile payments as a common way to pay for things, they will abuse that mechanism,” she said.
However, if terrorists find themselves effectively excluded from the formal financial system, they are more likely to abuse cryptocurrencies.
The Member States must step up their game
Greater scrutiny of crypto transactions has followed in the wake of international efforts to combat their use for illicit purposes. Martynova referred to a resolution from the UN Security Council, which urges member states to step up their cryptocurrency regulation.
She also referenced global standards recommended by the Financial Action Task Force, which focus on tracking blockchain transactions across jurisdictions.
Unfortunately, Martynova lamented that enforcement of these rules remains woefully underwhelming. Only 27 out of 98 jurisdictions in a recent survey reported that they had begun to create a regulatory framework for cryptocurrencies. Consequently, even fewer have been in a position to enforce them.
A criminal activity related to cryptocurrencies that has become increasingly prominent is ransomware attacks. This week, the Biden administration is hosting a global summit, with officials from around the world, to address the issue.
A White House official said a goal of the meeting would be to establish a globally coordinated approach to the issue.
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