Friday August 2, 2024
By Matthew Hill
(Bloomberg) -- Islamic State is insisting the cryptocurrencies that it’s increasingly using to fund its terrorist activities must comply with Sharia law, according to a United Nations report.
Terrorist groups also provide their associates with detailed instructions on how to transfer money through cryptocurrencies and have established specialized channels such as CryptoHalal and Umma Crypto on the Telegram messaging app, according to a body that supports United Nation’s Security Council Committees. The Analytical Support and Sanctions Monitoring Team tracks Islamic State and al-Qaeda.
Increased use of digital platforms such as cryptocurrency exchanges, e-wallets and stablecoins among terrorist groups to raise and transfer funds across the world is a growing concern among UN members, according to the report. That’s because such transactions mean the groups are better able to finance attacks without footprints investigators can track.
Under Sharia law, observant Muslims are not allowed to profit from interest, sales of pork, or so-called sin stocks linked to gambling, alcohol and pornography. The report didn’t mention how the terror groups were checking if the digital assets are compliant.
Even though cash couriers and hawala — a traditional money transfer system — are the preferred methods of getting finance into conflict areas, Islamic State “has purposely migrated to cryptocurrencies and online payment systems,” which are may become increasingly “pervasive and significant,” according to the report.
While Islamic State no longer controls the vast territory it did in Iraq and Syria a decade ago, the geographical reach of affiliates has spread from Mozambique to Afghanistan.
Somalia, in particular, has grown in importance and “acts in some ways as connective tissue for a dispersed organization,” the authors of the report said. The group’s affiliate in the Horn of Africa nation is its top revenue earner globally and generates about $360,000 a month, according to the report.
The UN body also flagged the growing use of anonymity-enhancing cryptocurrencies, or privacy coins, such as Monero. The website that promotes the digital asset didn’t respond to an email seeking comment.
One UN member state estimates Islamic State’s so-called Khorasan affiliate in Afghanistan received about $2.5 million in 2023 alone, according to the report. About 80% of these funds were sent from Western countries using decentralized blockchain technology, the Analytical Support and Monitoring team said previously.