Tuesday, January 31, 2023

Terrorists Move Funds Using Gift Cards, Not Bitcoin

Terrorists Move Funds Using Gift Cards, Not Bitcoin

Terrorists and other criminals are using an innovative, almost-anonymous store of value to move money and finance activities. Sound familiar? This time though, no-one’s trying to grab a cheap headline by pinning the blame on bitcoin. The target here is everyday gift cards.

Also read: Two of Bitcoin’s Biggest Names Team Up in Software Deal

An Australian report found 12 cases of suspicious stored-value card transactions between that country and those bordering Syria in 2014-16. There were another 66 transactions in countries deemed high-risk for terrorism financing and fighter transit.

AUSTRAC logoThe report comes from AUSTRAC, an Australian government financial intelligence agency that monitors money movements for illegal purposes. It calculated risks associated with different types of “stored-value cards”.

There are various types of stored-value cards, some commonly known as “gift cards”. Some come with identity requirements, some are completely anonymous. Some may be exchanged for cash, while others can only be used to purchase goods directly. Others can be re-loaded with value, others are disposable.

They can be everything from a Starbucks card to something you load with money to spend while traveling abroad. Some are even compatible with networks like VISA. All types were deemed high-vulnerability and medium-to-high risk for illegal activity in the AUSTRAC report.

However the report said there was no evidence the cards enabled fundraising for terrorist organizations — at least in Australia.

Gift Cards Easier Than Bitcoin

Suggesting bitcoin helps facilitate illegal activity, especially terrorism, is popular for media outlets trying to gain attention. Government agencies also use the hypothetical to call for more regulation of digital currency.

The reality, at least for now, is far more mundane. Stored-value cards have existed for decades now and are simple for anyone to use… and exploit. They’re a lot easier to carry and smuggle than bundles of paper cash. They can be hard to trace. So they’re more popular with terrorists and criminals.

To date, however, there has been little or no evidence of cryptocurrency use to fund terrorist activities. A January 2016 Europol report stated:

“Despite third party reporting suggesting the use of anonymous currencies like Bitcoin by terrorists to finance their activities, this has not been confirmed by law enforcement.”

If It’s Convenient and Moves Money, Criminals Will Use It.

gift cardsSky News quoted the Australian justice minister as saying: “Any way you can move money around they’re going to look to exploit, whether it be cash, whether it be credit cards, whether it be any other instrument within our financial system and that includes pre-paid cards.”

Digital currency proponents should still take note of the report’s findings, though. Criminals exploit gift cards because they’re easy to use. Bitcoin and digital currencies need to, and will get easier to use to gain mass appeal.

Ergo, allegations that bitcoin enables terrorism and criminal activity will probably increase in the future. And someday, they may also be correct.

Do you think gift cards need stricter regulation as a result of this? Let us know.


Images via AUSTRAC, Pixabay

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