Financing terrorism through cryptocurrencies – a danger for Europe?
| Date | 01 October 2018 |
| Pages | 513-519 |
| Published date | 01 October 2018 |
| DOI | https://doi.org/10.1108/JMLC-06-2017-0024 |
| Author | Fabian Maximilian Johannes Teichmann |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
Financing terrorism through
cryptocurrencies –a danger
for Europe?
Fabian Maximilian Johannes Teichmann
Teichmann International AG, St. Gallen, Switzerland
Abstract
Purpose –This purpose of this paper is to illustrate how terrorists finance their activities through
cryptocurrencies.
Design/methodology/approach –A qualitative content analysis of 30 semi-standardized expert
interviews with both illegal financial serviceproviders and prevention experts developed understanding of
the concretetechniques of financing terrorism through cryptocurrencies.
Findings –Terroristscould use Bitcoin to receive donations from their supporters.
Research limitations/implications –As the findings are based on semi-standardizedinterviews, they
are limited to the perspectivesof the 30 interviewees.
Practical implications –The identification of gaps in current prevention mechanisms is intended to
provide legislatorsand intelligence agencies with insightsinto the operations of terrorism financers.
Originality/value –While the existingliterature focuses simply on identifying areas that could playa role
in financing terrorism, this paper describes concrete methods, taking both prevention and criminal
perspectivesinto account.
Keywords Bitcoin, Terrorism, Cryptocurrencies
Paper type Research paper
Introduction
Cryptocurrencies are often accused of being an ideal instrument for terrorists. As Bitcoin
and similar alternative currenciesare completely anonymous, they are, hence, very difficult
to trace. However, it is questionable whether they are indeed suitable for financing
terrorism. This paper investigates the steps taken by terroriststo finance terrorism through
cryptocurrencies withoutbeing caught. It will emphasize both the strengths and drawbacks
of this method from the perspective of terroristfinancing, with the aim of increasing insight
into how it should be combated.
Literature review
There is no uniform definition of terroristfinancing or even of terrorism itself (Cooper, 2001,
p. 881; Ruby, 2002, p. 9 f.; Tilly, 2004, p. 5 f.; Tofangsaz,2012, p. 386). Hence, this article will
use the definition contained in the International Convention for the Suppression of the
Financing of Terrorism, adopted by the General Assembly of the United Nations in
resolution 54/109 of 9 December 1999. Multiple countries have used this definition as a
foundation for their nationallegislative measures.
The existing literaturediscusses several different types of funding. In particular, it points
out that terrorists rely upon both legal and illegal funding sources. Examples of legal
sources include stock marketand real estate investments, as well as salaries. Illegal funding
is often gained through robbery, theft, kidnappings and drug trafficking (Dalyan, 2008,
Danger for
Europe
513
Journalof Money Laundering
Control
Vol.21 No. 4, 2018
pp. 513-519
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-06-2017-0024
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