Combatting Terrorist Financing in the Age of Crypto: Opportunities for the Biden Administration

i-AML Crypto Terror

The website looked like any other selling PPE equipment during the pandemic – except it wasn’t. Instead, the site “Face Mask Center” was a subtle attempt to sell faulty PPE equipment to spread the Coronavirus and to raise money for terrorist organizations according, to a Justice Department investigation revealed this summer.

The ruse captured headlines, and also underscores the very real challenge of combating terrorist financing. This episode highlights actors’ innovative efforts astute enough to exploit even a global pandemic for their still active ambitions.

As further evidence of the current, sophisticated nature of terrorist financing efforts during the pandemic, the U.S. government has seized more than $2 million worth of cryptocurrency that was headed to terrorist groups in the Middle East. And yet, this scheme is neither new nor confined to a single geographic region. Despite an Indonesian jihadist’s dismissive attitude in 2016 toward using Bitcoin to fund terrorism as “ too complicated,” the cryptocurrency is gaining utility in Southeast Asia as a financing mechanism for terrorist groups there. Indeed, even in August 2016, criminals stole approximately $60 million in Bitcoins from Hong Kong to exploit the g-based Bitfinex Exchange; that crime to date remains unsolved.

Cryptocurrencies are a growing global problem in their role of financing terrorism. In keeping with its ongoing commitment to combatting terrorism, the United States must work with a new set of global partners to match the new sources of the threat. While traditional allies in Europe and NATO should be consulted for collaborative measures, new potential partners exist in the form of intergovernmental organizations that can engage more directly with the challenge in the new centers of gravity for terrorist financing. One such entity is the Islamic Military Counter-Terrorism Coalition (IMCTC).

Founded in 2015 with principal Saudi support, and in response to the threats posed by Islamic State, the IMCTC is an organization of 41 states, primarily from the Muslim-majority world, but including other vulnerable countries such as Uganda. Notwithstanding its name, the IMCTC engages primarily in non-military operations to combat terrorism in hotspots around the globe through the exchange of best practices, legal and regulatory advice, and both operational and strategic communications frameworks.

American allies have already recognized the merits and benefits of collaborating with the IMCTC. In late October, the head of the European Union for the Arabian Gulf region visited IMCTC Headquarters in Riyadh to discuss ways to further cooperation. According to media reports, a key focus of discussion was terrorist financing. The IMCTC has been examining issues surrounding cryptocurrencies and other areas of concern. Some IMCTC member states, like the United Arab Emirates, have already responded to IMCTC revelations by implementing new regulations to deter such illicit activity.

Critics might argue for organizations like the Financial Action Task Force (FATF) to be the preferable ally for American collaboration on combatting terrorism financing. Given the stated mandate and scope of current operations that are being conducted, the IMCTC is best equipped and suited to be America’s partner in this shared objective. The IMCTC has already been coordinating with important countries in this effort. This month the IMCTC signed an agreement with the Financial Academy of Saudi Arabia, part of the Kingdom’s Ministry of Finance, to more closely align IMCTC efforts with those of the financial world.

The United States can benefit from the ongoing efforts, infrastructure, and coordination of the IMCTC as it continues its current campaign against terrorism without overextending its resources. Indeed, last year, acting IMCTC Secretary-General Maj. Gen. Mohammed bin Saeed Al-Moghedi met with an American delegation and called for closer cooperation and further development of a “strategic partnership” between the IMCTC and the United States.

The incoming Biden administration should build on this proposal and accept the offer as a welcome and constructive opportunity to combat the existing and evolving threat of terrorism. The Biden administration can be assured that the United States does not have to take on the new dimension of combatting terrorism alone; the IMCTC is an example of a capable and willing partner on the ground already, one that is awaiting American engagement.


By Saeed A. Khan, December 23, 2020, Published on RealClearDefense

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