Researchers in the Philippines track terrorist use of crypto-currency

A report published by the Philippine Institute for Research on Peace, Violence and Terrorism (PIPVTR) reveals that Islamic State (IS)-related terrorist groups in Southeast Asia have recently made their first transactions using crypto-currency.

According to the report released on 20 May, the funds are helping to finance regional terrorist groups such as the Jemaah Ansharut Dalauh and the East Timur Mujahideen in Mindanao.

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Coin Washing
The report detailed the use of crypto currencies in a money laundering operation, which had two phases according to the PIPVTR. The first was where crypto assets of „suspicious origin“ were made through unidentified exchanges. This „deliberately obfuscated“ the transactions and origins of the coins, making them difficult to trace.

The PIPVTR detailed the following with respect to the second phase, where the money laundering cycle ended:

„The second phase refers to an exchange of these cryptoactives for trust money which then returns the funds to the legal money cycle. In cryptomoney-only exchanges, these can be exchanged with each other“.

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in the country
The study warns that terrorist groups in Southeast Asia may trade in cryptomoney outside the supervision of regulatory institutions, which raises concern given the lax legal framework.

The institute calls on authorities to implement anti-money laundering and anti-terrorist financing procedures for crypto currencies because the system is fragile, and accuses the government of losing control of financial flows.

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Concerns about „anonymous cryptoactives“
The report cited the case of the 2017 siege of Marawi, where there were unconfirmed reports of private remittances and cash couriers with crypto-currencies helping to finance the terrorist groups involved. These reports were „largely ignored“ by the authorities.

PIPVTR also expressed concern about the increased use of „anonymous cryptoactives“, such as Monero (XMR), which facilitate the concealment of illegal activities.

Cointelegraph reported in March on a US ISIS supporter who was sentenced to 13 years for funding the terrorist organization using cryptomonies, including Bitcoin, in 2017.

However, Chainalysis, the analysis company Blockchain, released a report today that discredits numerous stories about terrorist groups using cryptomoney. The report says that many news stories on the subject were based on incorrect information.