(Kitco News) The number of terror attacks financed by crypto is likely surging, with the current estimate standing at around 20%, according to a United Nations official.
Cash remains the most common way to finance terrorist attacks, but the use of crypto is on the rise — moving from 5% a couple of years ago to 20%, Svetlana Martynova, senior legal officer at the United Nations Counter-Terrorism Committee Executive Directorate, told Bloomberg in an interview in Mumbai.
"Now we're thinking that it may reach about 20%. Statistics here are not our best friends. We're just seeing more as we're looking more into it," Martynova said. "Cash is always king. It's as anonymous as can be; it's the most difficult to detect in reality."
Martynova also spoke at a United Nations Security Council meeting that took place at the Hotel Taj Mahal Palace in Mumbai. This was one of the locations where a series of coordinated terrorist attacks happened in November 2008.
"With regards to moving funds, experts agree that cash and other time transfers remain the prevalent methods used by terrorists," she said last week. "There was also an increase in their use in combination with new payment methods."
Martynova pointed to crypto opening the door to anonymous cross-border funds transfers. "Blockchains, cryptocurrencies and crowdfunding sometimes pose a complex money trail for financial investigators to follow," she said.
The solution, however, would not be to ban cryptos, Martynova pointed out, stating that authorities need to work on understating the threat and coming up with appropriate ways to respond.
The answer needs to be "risk-based, outcome-based, proportional and human-rights law compliant," she said in her talk.
The UN advises following Financial Action Task Force (FATF) recommendations when dealing with terrorism financing, which includes the "travel rule." The rule asks virtual asset service providers (VASP) to report on crypto transactions exceeding a certain threshold. But not many are using them, according to FATF.
A report by blockchain research firm Chainalysis showed that crypto crime climbed to a record high in 2021, with illicit digital-asset addresses receiving $14 billion last year, which is more than double the 2020 total of $7.8 billion.
The report said groups like Al-Qaeda and al-Qassam Brigades, which is Hamas' military wing, attempted to use crypto when financing their options, but it is difficult to detect "a group that has gotten away with it."
