Insight Monitor Dispatches: extremist financing through cryptocurrencies and a terrorist listing
Last week, I spoke to Ben Makuch for the Guardian about what Trump’s promise to loosen crypto regulations means for extremist groups. I told Ben that “any loosening of regulations on crypto (or, frankly, the appearance of loosening) is likely to further increase extremists’ use of crypto” and that “while the integration of crypto into the traditional financial system is not a nefarious goal, steps to do so, without proper regulation and compliance with international counter-terrorist financing standards, will make it easier for terrorists to raise and move funds for their purposes.”
Over the last few years, we’ve seen extremist groups (and listed terrorist groups / entities) increasingly use cryptocurrency, from extremist websites (we wrote an article about one in particular that you can read here) to Atomwaffen Division and the Russian Imperial Movement. In other cases, however, extremists have eschewed the use of cryptocurrency, saying that it is “fundamentally worthless” and not useful for attack financing. All told, extremists have an interest in cryptocurrency, but they don’t always adopt it, including because of concerns about its traceability. At this point, I’d say that terrorist groups like the Islamic State, Hamas, and Hizballah are more likely to use cryptocurrency than ideologically motivated extremists. You can read more here.
In other big terrorist financing/sanctions news, Canada decided to list the Houthis (aka Ansarallah) as a terrorist entity. I’ve advocated for this for a while now, given the threat they pose to international security. Based on our analysis, I doubt that Canada has significant exposure to Houthis financing, but as with any sanction, designation, or listing, the more allies that coordinate, the more effective these measures are. Terrorists and non state actors have a long history of engaging in jurisdictional arbitrage to take advantage of permissive jurisdictions. This listing will help prevent Canada from being used for Houthis finance. Click here to read more about Houthis.
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Canada is also gearing up for its review by the Financial Action Task Force. I spoke to Alexandra Posadzki, the Globe and Mail’s new financial and cybercrime reporter, about what it could mean for Canada. While I think that Canada has a relatively strong counter-illicit financing regime, I do think that we will struggle to demonstrate significant progress since 2021 (our last follow-up report), and even 2016. I point to lagging issues such as beneficial ownership (the provinces aren’t fully on board with this yet), our lack of foreign agent registry (legislation has passed but it hasn’t been implemented), as well as the mysterious financial crimes agency that was promised years ago, but that has yet to see the light of day. I also noted that “Canada’s prosecutions for crimes such as sanctions evasion, terrorist financing and money laundering are incredibly low, in some cases almost non-existent.” While I doubt that Canada will be grey-listed, I assess the chance as “non-zero”, and that geopolitical tensiosn could factor into this process. Ten years ago, I would have told you that this is an apolitical process. This year, under a Trump presidency and with increased foreign interference by India, China, and other countries, I think that calculus is different. For instance, “if Canada were to be evaluated by assessors from the United States, they may factor in comments from president-elect Donald Trump, who has been pressuring Canada to crack down on the flow of drugs and illegal immigrants across the U.S. border.” Have a read of the full article here.