The Banking Executive Magazine - June 2022 Issue

Digital Currency The use of cryptocurrency by terrorist organizations places greater pressure on the international community to fight terrorism financing. The incen- tive for terrorist organizations to use cryptocurrency is largely due to its anonymity and the lack of strict na- tional financial supervision. The rea- sons for reducing the use of cryptocurrency by terrorist organiza- tions are the price of cryptocurrency and internal development mode, the strengthening of international organ- izations and national supervision, and constant attacks. In addition, the traditional means of terrorist financ- ing have not been fatally hit, and still function effectively to raise funds for terrorist organizations. Therefore, the use of cryptocurrencies by terrorist organizations is limited. THE USE OF BITCOIN AND BLOCKCHAIN IN TERRORISM Bitcoin is both a protocol for se- curely storing and transmitting to- kens (virtual coins) and the name of the unit of value in the system. Bit- coin revolves around a public ledger called the blockchain, which is maintained by an online peer-to-peer network that tracks transactions and maintains a complete history of veri- fied transactions. Media reports have outlined the notion that some, or even many, terrorist organizations have unlimited, untraceable sources of digital money, such as Bitcoin. Policymakers also have raised con- cerns about terrorist use of Bitcoin. CRYPTOCURRENCY AND TERRORIST FINANCE IN ASIA According to The Diplomat article by Asif Muztaba Hassan, cryptocur- rency, is viewed by many as the fu- ture of financial transactions. While the rise and further development of crypto are widely celebrated, specu- lations about its traceability, and its potential to be used in criminal ac- tivities, always loom in the horizon. A handful of states around the world have already taken measures to reg- ulate crypto transfers, in line with the Financial Action Task Force’s (FATF) 2020 standardized guidelines, secur- ing virtual assets from money laun- dering and terrorist financing. Yet, many states in Asia, including those with a history of terrorism, are falling behind, increasing crypto’s potential to be a threat multiplier. Indonesia, for instance, is still an ob- server in the FATF, and does not face any obligations to implement the guidelines, while the Philippines is on the brink of being included in the FATF grey list owing to “strategic de- ficiencies” in the country’s anti- money laundering and terrorism financing systems. Most importantly, however, these states still prefer to heavily invest in monitoring conven- tional financing channels, exposing large gaps in the political will to ac- tively track crypto flows. USE OF DIGITAL CURRENCY IN RUSSIA-UKRAINE WAR According to research by Aidan Arasasingham in the Economics Pro- gram at the Center for Strategic and International Studies (CSIS) in Wash- ington, D.C. and New York Times ar- ticle by Emily Flitter and David ISSUE 162 JUNE 2022 the BANKING EXECUTIVE 11