Evidence that terrorist networks are returning to crypto for funding in Southeast Asia
Terrorist networks in the Philippines, that have been linked to IS, recently conducted their first transactions involving cryptocurrencies
It appears that some terrorist groups have returned to cryptocurrencies as a means of funding in the midst of the pandemic.
Research by the Philippine Institute for Peace, Violence, and Terrorism Research (PIPVTR) in May revealed that terror groups linked to the Islamic State (IS) began conducting transactions in cryptocurrencies.
The report stated that a money-laundering operation linked to terrorists, which involved the use of cryptocurrencies, generated funds that were allegedly used to finance the activities of terror networks operating in the Mindanao region of the Southern Philippines.
While the adoption of cryptocurrency is not a surprising turn of events among IS supporters, this case indicates that there is a renewed push to diversify funding streams for terrorism groups in Southeast Asia.
IS has taken an interest in cryptocurrency for several years. A high-profile case from 2015 saw a 17-year-old from the US jailed for giving IS supporters online advice for how to use Bitcoin to hide their financial donations; in an infamous blog entitled “Bitcoin and the Charity of Jihad.”
An early proponent of cryptocurrency for terrorism financing in Southeast Asia was Bahrun Naim, an Indonesian IS fighter who was based in Syria. Before his death, he published an online manual in 2016 and listed Bitcoin as one of the methods to launder the proceeds from fraudulent credit card transactions.
During this time, the Financial Intelligence Unit of Indonesia reported that Naim had moved money to his associates through PayPal, with the funds originating from Bitcoin holdings. These funds were eventually used to fund a terrorist attack on the Solo Police Headquarters in July 2016.
In October 2018, an Indonesian extremist charity that supported the AQ-linked rebel group, Hayat Tahrir al-Sham (HTS) in Syria, orchestrated fundraising efforts using cryptocurrency. Supporters donated using Monero, Dash, Verge and Bitcoin.
Aside from these incidents, the use of cryptocurrencies by militants in Southeast Asia is relatively low. This is, in part, due to the limited pool of militants with the sufficient tech skills within the region.
In 2016, a pro-IS cell based in Majalengka, Indonesia, considered f raising funds in Bitcoin, but did not proceed as the activity was deemed too “complicated.”
Most Southeast Asian economies allow cryptocurrency to exist as an investment product or virtual asset, but prohibit its use as legal tender.