Even with the widespread use of cryptocurrencies, traditional financing methods remain prevalent among terrorist organizations.
Recent internal security investigations in Singapore have provided new insights into the financing methods used by these groups.
Singapore Terrorism Threat Assessment
Singapore’s Ministry of Home Affairs has published its 2024 Terrorism Threat Assessment reportwhich highlights the continued high risk from global instability.
The analysis, prepared by the Internal Security Department, shows that despite a slight increase in cryptocurrency financing activities, terrorist groups As of May 2020, this is still minimal compared to the conventional money transfers that are most commonly used.
The report also found that money couriers and traditional bank transfers are the main means by which Islamic organisations such as ISIS (Islamic State in Iraq and Syria) raise funds.
In spite of the technological advancement With cryptocurrencies, these groups still rely on more discreet and less traceable means, such as the hawala system: an informal method of transferring money without any physical movement.
The report also names wire transfers and money transfer offices as the two main methods used by these groups, in addition to direct cash couriers.
Despite cryptocurrencies’ potential to offer untraceable transactions, their actual use in terrorist activities remains significantly lower than traditional methods. According to the report, a pro-ISIS group in the Philippines attempted to use cryptocurrencies to fund their activities in February.
They launched a social media campaign to collect donations for what they called the “mujahideen,” showing the potential of digital platforms to be exploited for financial support. However, the report revealed that this has not become a dominant trend, as some security analysts had expected.
The continued refinement of crypto guidelines
Despite the fact that crypto is less used for terrorist financing than cash, Singapore has been continuously refining its guidelines for this financial sector. In April, the Singapore Monetary Authority (MAS) changes to the Payment Transactions Act implemented in the region.
According to Bitcoinist, these changes, which went into effect on April 4, include a series of measures regarding the custody of digital payment tokens (DPTs), facilitating the transfer of DPTs, and cross-border money transfers.
MAS announced what the change was intended to accomplish, noting:
The amendments give MAS the authority to impose requirements on DPT service providers relating to anti-money laundering and countering the financing of terrorism, user protection and financial stability.
Before that, last November, MAS also made a notable change to its crypto regulation. Specifically, the country’s regulator introduced trade restrictionsincluding a ban on borrowing and staking. According to MAS, this is part of Singapore’s ongoing efforts to ensure a “safer crypto market.”
Main image created with DALL-E, chart from TradingView