A study by the Philippine Institute for Peace, Violence and Terrorism Research (PIPVTR) reveals that terrorist groups related to Islamic State (IS) in Southeast Asia have recently made their first transactions by using cryptocurrencies.
On May 20, it has been reported that the funds are helping finance regional terror groups like the Jemaah Ansharut Dalauh and the Mujahideen Eastern Timur in Mindanao.
However, the report detailed a money-laundering operation’s use of cryptocurrencies, which, according to the PIPVTR, consisted of two phases. The first was where crypto assets of “suspicious origin” were channeled through unidentified exchanges, as this “deliberately obfuscated” transaction and the origins of coins by making them tracking more difficult.
PIPVTR detailed the following phase two:
“The second phase refers to an exchange of these crypto assets into fiat money which, then, returns the funds to the legal money cycle. In crypto-only exchanges, cryptocurrencies can be exchanged with one another.”
A institute in the Philippines reports that local terror groups linked to Islamic State have been experimenting with crypto for money laundering https://t.co/n8EghhEUsc — Cointelegraph (@Cointelegraph) May 21, 2020
As per the report, the study warns that terror groups in Southeast Asia can trade crypto outside the supervision of regulatory institutions, and this raises concerns, given the loose legal framework.
The institute calls on the authorities to implement Anti-Money Laundering (AML) and Countering Financing Terrorism procedures for cryptocurrencies because the system is fragile, and they accuse the government of losing control of financial flows.
However, the report stated the Marawi Siege case, which occurred in 2017, were unconfirmed reports of private remittances and cash couriers with cryptocurrency helping finance the terrorist groups involved, as these reports were “largely ignored” by the authorities.
Thus, PIPVTR showed concern regarding the increased use of “anonymous crypto-assets” like Monero (XMR), which make it easier to hide illegal activity.