A BIT OF RECENT GROWTH: THE EVOLVING RISK OF TERRORIST USE OF VIRTUAL CURRENCY
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Authors
Ditamore, Stephen
Subjects
virtual currency
cryptocurrency
cross-border payment systems
money laundering
terror finance
terrorism financing
financial technology
fintech
AML/CFT
bitcoin
cryptocurrency
cross-border payment systems
money laundering
terror finance
terrorism financing
financial technology
fintech
AML/CFT
bitcoin
Advisors
Halladay, Carolyn C.
Brown, Shannon A.
Date of Issue
2018-12
Date
Publisher
Monterey, CA; Naval Postgraduate School
Language
Abstract
The use of decentralized virtual currencies (DVCs) by terrorist organizations (TOs) on a significant scale could present unique challenges for regulators, policy makers, and law enforcement because they offer the potential for an illicit funding network that can be very difficult to disrupt or even detect. However, the body of existing research regarding the threat of terrorists' use of DVCs has determined that though it has become the payment method of choice for cybercriminals and many transnational criminal organizations, researchers do not believe that TOs will leverage DVCs on an appreciable scale in the near future. To justify their determinations, prior researchers cite insufficient market size, anonymity, and broad commercial acceptance, coupled with a perceived lack of TOs’ technological sophistication, as limits to the practical use of DVCs over other better-established and less complicated terror funding methods. They further suggest that existing AML/CFT regulations, narrowly applied to DVC exchanges should be sufficient to catch terror financiers. However, this thesis identifies recent developments in DVCs and the ecosystems that support them that suggest all of the primary pillars on which prior research has been built may have eroded sufficiently to warrant further investigation into the potential threat posed by terrorist use of DVCs. The homeland security enterprise must not be lulled into complacency by what this thesis finds to be already outdated research.
Type
Thesis
Description
Series/Report No
Department
National Security Affairs (NSA)
Organization
Identifiers
NPS Report Number
Sponsors
Funder
Format
Citation
Distribution Statement
Approved for public release; distribution is unlimited.
Rights
This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.