Stricter verification laws in the U.S. won’t stop international terrorists from using crypto

Notably, cryptocurrency companies America is regulated—Has been this way since 2013.Exchanges and other financial intermediaries are money services businesses under the Bank Secrecy Act, and they are already required to Financial Crimes Enforcement Network and report any suspicious (potentially criminal) activity.what american exchanges do Anti-money laundering/Know your customers Check and screen all potential clients for sanctions. It makes America safer.In this regard, other countries have something to learn from the United States

The most recent proposal was made by More than 100 members of parliamentSenators, including Sens. Elizabeth Warren (D-Mass.) and Roger Marshall (R-Kansas), have done nothing to address the growing number of cryptocurrency-related crimes occurring overseas and by Problems with implementation by unregulated actors. Their proposed KYC rules are similar to suggestions that photocopier manufacturers need to verify anyone using their photocopiers. Unfortunately, the authors failed to understand that the underlying blockchain technology actually made the transactions public, providing investigators with a digital paper trail identifying terrorists and their financial contributors. There are solutions.

Back in 2016, I began researching terrorist crowdfunding campaigns.In fact, the first campaign I tracked was organized by a network of Palestinian activist groups aimed at raising funds Buy missiles and other weapons. The campaign lasted for several weeks and resulted in just over $500 in Bitcoin. Over the next few years, various terrorist groups, including Hamas, became more familiar and sophisticated with cryptocurrencies. But it’s unclear whether public crowdfunding is the most reliable way to raise money.

Crowdfunding can be risky for those who dare to provide funds to terrorist groups.In fact, earlier this year, Hamas’s military branch announced Suspended its Bitcoin activities Because there has been so much disruption to the financing network.It turns out that open solicitations for cryptocurrencies enable security forces to Easily track donations and going after Hamas supporters and their financial institutions. In 2020, the Department of Justice reported how U.S. law enforcement conducted a covert operation Cryptocurrency campaign to subvert Hamas, taking over its website and transferring donations to U.S.-controlled wallets.

Given this reality, how is it possible for Hamas and its affiliated Palestinian terror groups to obtain tens of millions of dollars in cryptocurrency?

Most recent reports on Hamas’ crypto funding have relied on information from Israeli seizure documents, legal records of accounts linked to criminal activity that have been blocked or seized. What may not be easy to understand is that when law enforcement seizes terrorist assets, it overwrites everything in the targeted account, regardless of origin. It seems unlikely that the millions of dollars worth of crypto funds in these accounts came from direct donations from the public. More plausibly, the funds represent a combination of terrorist financial activity and sources converted into cryptocurrencies. These digital wallets may also include local currency services businesses that serve Hamas as well as benign clients. (Such businesses would still be considered terrorist facilitators and may have their accounts seized, even if they contain funds associated with non-terrorist clients.)

Much of the discussion about Hamas’s use of cryptocurrencies ignores the scope of their funding operations.Hamas’s exact funding sources are opaque and difficult to verify, but the group may rely on money from Iran tens of millions of dollars every year together with overseas Donations from Gulf countries, especially.Funding also comes from taxes and duties, cash smugglingand various Currency exchange businesses and front companies. Counterterrorism finance officers attack this funding mix by targeting promoting institutions.For example, last year the U.S. Treasury Department Sanctioned The Hamas finance official oversees the Hamas Investment Office, which manages a portfolio of multinational companies including construction, real estate and mining companies with assets in excess of $500 million from Sudan, Turkey, Saudi Arabia, Algeria and Emirates Airlines of the United Arab Emirates. The designation program targets the assets of key individuals who make and move funds for Hamas.

While the role of cryptocurrencies for Hamas is likely to be a small portion of Hamas’s budget, the Treasury Department should adopt a similar, laser-focused strategy to deal with Hamas’s access to crypto accounts. The United States should target any business or entity that continues to support Hamas’ network in purchasing, receiving, and sending cryptocurrency.The international community has The development of standards How cryptocurrency trading businesses should operate legally to prevent money laundering and terrorist exploitation. Businesses in countries that do not enforce these standards provide Hamas with a way to evade sanctions and acquire cryptocurrency. The Treasury Department should consider imposing sanctions on these non-compliant cryptocurrency exchanges, and the U.S. government should take specific steps to ensure that cryptocurrency exchanges continue to thrive within the United States with better regulatory scope.

The United States does not need new legislation or law enforcement tools to track Hamas’ crypto assets. The world of terrorism financing has always been a cat-and-mouse game. Those trying to stop Hamas will need to be as nimble and creative as their adversaries, and use the tools we have to identify and disrupt its financial networks.

Yaya J. Fanusie is a former CIA analyst and current Director of Anti-Money Laundering and Cyber ​​Risk Policy at the Cryptocurrency Innovation Council. The views expressed in Fortune Star review articles represent solely those of the author and do not necessarily reflect the following views and beliefs: wealth.