MEMRI's research found that the main platform for terrorist fundraising today is Telegram. Terrorist organizations often publish their bitcoin addresses on online platforms such as Telegram, Facebook, Twitter, etc., and show potential donors how to use cryptocurrency contributions via video, PDF and other forms.
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Previously, in June 2019, the Financial Action Task Force (FATF) had issued a new guide to its member states on how to handle cryptocurrencies . The FATF stated in the report:
At the G20 summit in Japan at the end of June this year, 20 finance ministers and central bankers formally promised to implement the FATF guidelines. After the G20 is determined to comply with the FATF standards, we will soon see implementation of the standard around the world.
What does this mean for the entire blockchain community?
01. The privacy of cryptocurrencies is under attack
Data privacy protection and anti-censorship can indeed facilitate illegal transactions. When cryptocurrencies are used incorrectly, they may be used as a means of circumventing government regulation. As a result, the privacy of cryptocurrencies has become the target of attacks.
MEMRI said in the report: "With a series of terrorist organizations using the anonymity provided by blockchain technology to raise funds and finance, cryptocurrencies have entered the field of terrorism."
MEMRI pointed out that some jihadist leaders are supporting the use of cryptocurrencies and encrypted communication services such as Telegram for financing. Therefore, the government authorities have been conducting a rigorous review of online anonymity .
According to Justin Tabb, CEO of Amplify, a cryptocurrency trading platform:
This is why it is important to treat anonymity in a subtle way, rather than treating all platform users as terrorists .
02. The promotion of cryptocurrency regulation
In 2017, the US government called on the Department of Homeland Security to study how terrorists use bitcoin; similarly, the British government has raised regulatory requirements for digital currencies to curb digital anonymity. How does this affect the anonymity of cryptocurrencies?
Established in 1989, the Financial Action Task Force (FATF) aims to combat money laundering, and the organization has developed new guidelines that will affect cryptocurrency and terrorist financing.
With the introduction of the new FAFT guide, companies related to cryptocurrencies such as Fidelity, Kraken and Coinbase will have to collect more user information . In addition to conducting compliant KYC, CFT (anti-terrorist financing) and AML (anti-money laundering) reviews, these companies also need to collect data on recipients of funds .
This seems irrelevant, but it is a very significant change, and these new regulations will pose a major threat to cryptocurrencies!
In response, Ted Foxworth, head of the cryptocurrency trading platform CryptoRocket, believes that FATF's requirements will likely fail. Foxworth said:
03. “Without bitcoin, US banks and politicians are still unscrupulously involved in terrorist financing”
Earlier, US Treasury Secretary Steven Mnuchin smashed the cryptocurrency at a press conference. Steven tried to discredit the cryptocurrency industry through connections related to money laundering and the financing of terrorism. He said he was "seriously worried" that Bitcoin could be abused by "money launderers and terrorist financiers."
Ironically, KeyCorp's share price fell on the second day of Steven's smeared remarks, as it was reported that the Ohio bank found a $90 million salary-handling fraud case.
The fact is that in the absence of bitcoin, mass fraud and illegal money laundering programs have always been a common problem in traditional banking. Moreover, the US government itself is more likely than anyone to finance terrorism.
Money laundering cases in which US banks participate without using bitcoin:
While some may use bitcoin for money laundering/terrorist financing, criminals use traditional banking systems to launder money without much difficulty. Usually, the bank itself is directly involved in the illegal operation of money laundering.
1. Wells Fargo (2010, $375 billion in money laundering): In 2010, Wachovia, which was acquired by Wells Fargo, was fined $160 million for failing to implement money laundering control. The Mexican drug trafficking group spent $375 billion on the bank’s money laundering.
2. JP Morgan Chase (2018, $5.3 billion fine): In October 2018, the US Treasury imposed a fine of $5.3 billion on JP Morgan Chase because the bank violated the Cuban Asset Control Regulations, Iranian sanctions and mass destruction. Weapons sanctioned 87 times."
3. HSBC (2012, $1.9 billion fine): In 2012, HSBC (USDBC) fined $1.9 billion for money laundering, drug trafficking groups and sanctioned governments.
4. Danish Bank (2017, 200 billion euros): In 2017, Danish banks were found to transfer $230 billion worth of black money from Russia and some former Soviet states to some Western banks.
5. Standard Chartered Bank (2000, $250 billion in money laundering): In 2000, Standard Chartered Bank spent $250 billion on Iran’s money laundering.
The history of the US government's financing of terrorism through legal currency:
1. Operation Cyclone has funded the Jihadist Organization (1979-1989): It is well known that the CIA provided hundreds of millions of dollars to the most violent terrorist organizations in Pakistan and Afghanistan in the 1980s. There is a Hollywood movie about this theme, "The Battle of Charlie Wilson" starring Tom Hanks.
2. Saddam’s regime funded by former US President Reagan (1980s): Iraq, once led by Saddam Hussein, was a vassal of the United States in the 1980s and an agent against the Soviet Union and Iran. It's no secret. In addition, it is well known that although Iraq was included in the list of countries supporting terrorism in 1979, the United States still provided weapons and funds to Saddam.
3. A $43 million grant to the Taliban (May 2001: Shockingly, just four months before the World Trade Center and the Pentagon were attacked, the US State Department announced $43 million in aid to the Taliban.
4. Bush/Obama-era American ATF agency sells guns to drug trafficking groups (2006-2011): Bush-Obama-era ATF (American Tobacco, Fire, and Explosives Authority) deliberately violent Mexican drug trafficking group Fast in action And Furious sells guns.
5. Obama Funding Al-Qaida Branches in Sudan (2015): In 2015, the Obama administration provided $200,000 to an organization in Sudan, which the US Treasury Department listed as a terrorist financing agency 10 years ago. .
At the same time, if we are concerned about money laundering and terrorist financing, we have more pressing concerns than bitcoin and cryptocurrency . Perhaps we should be responsible for the role of governments and banks involved in money laundering/terrorist financing in their role in global criminal companies.
Author | Luke Fitzpatrick & Wes Messamore
Compile | Summer