UN report says terrorist organizations use Monero for fundraising, will regulatory "tightening" become stricter?

Original Title: “Terror Groups seek Crypto donations using Monero: Alarming UN report”

Author: Jahnu Jagtap, Cryptotimes

Compiled by: Felix, PANews

As terrorist organizations adapt to an increasingly digital world, seeking new ways to raise and transfer funds, the global fight against terrorism faces new challenges. According to recent findings from the United Nations Security Council monitoring group, the notorious terrorist organization ISIL has "migrated" from its long-trusted "Hawala" (Note: refers to an informal method of transferring money, typically through unauthorized dealers. Such transactions are not regulated by the Reserve Bank of India, making it impossible to trace the source of funds) to cryptocurrency.

The report indicates that terrorist organizations like ISIL and Al-Qaeda are abandoning traditional fundraising methods such as Hawala, kidnapping, and extortion, now preferring to use "more anonymous" cryptocurrencies (with Monero as a representative) and embedding QR codes for donations in their propaganda e-magazines.

These organizations have even established "Halal standards" (Halal is translated as lawful in Islamic society) to promote their ideology and operations. The report states that these organizations have set up two dedicated crypto channels on the Telegram messenger app, namely CryptoHalal and Umma Crypto, guiding supporters on how to acquire and use specific digital currencies and accepting crypto donations approved based on "preliminary Islamic law assessments."

For example, ISIL-K utilizes the anonymity of privacy coins, launching fundraising campaigns using QR codes linked to Monero wallets. Although some cryptocurrency exchanges have delisted Monero, the use of Monero by terrorist organizations continues to increase, making it difficult for authorities to track the flow of funds.

In August 2020, the U.S. government seized over 300 cryptocurrency accounts, multiple websites, and Facebook pages, allegedly belonging to members of Al-Qaeda, ISIS, and Hamas military organizations.

Notably, ISIL's use of digital platforms is expanding, raising increasing concerns among member states. Various cryptocurrency exchanges, gaming platforms, e-wallets, and stablecoins are being used to raise and transfer funds. One member state pointed out that while cash courier services and Hawala remittances are the preferred methods for transferring funds to conflict areas, ISIL has intentionally shifted towards cryptocurrencies and online payment systems. With the growing prevalence of digital methods such as e-wallets, prepaid mobile cards, and cryptocurrencies, this phenomenon is expected to become more common and significant.

Due to their ability to obscure transaction details, privacy coins like Monero have become the preferred medium for financing terrorism. The UN report emphasizes the difficulty of monitoring these transactions, as they offer a level of anonymity unmatched by traditional financial systems. ISIL and its affiliates exploit these features for fundraising activities, ensuring their financial activities go undetected by authorities.

The report also highlights the complexity of the terrorism financing networks. ISIL's affiliates, particularly those in Africa, have made significant contributions to the organization's fundraising efforts. These affiliates often rely on informal channels, making them less susceptible to disruption. For instance, ISIL-K raised $2.5 million in 2023, some of which may be linked to specific attacks, underscoring the ongoing threat posed by these organizations.

The strongly worded report from the UN Security Council monitoring group is sure to draw attention from several countries, including the United States, the United Kingdom, Europe, and India. Recently, the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) issued a warning urging financial institutions to monitor cryptocurrency transactions that may be linked to the terrorist organization Hamas.

Furthermore, the impact of this report will also extend to the cryptocurrency industry, as hawkish security agencies may enhance monitoring of asset flows related to suspicious activities.