A new report by Interpol has revealed that terrorists launder their money through formal banking channels, legitimate front companies and in cash, contrary to growing claims from cynics implicating cryptocurrency in terrorist financing.
The report also revealed that environmental crimes such as wildlife trafficking and ivory trade now supersede drug money as the biggest source of funding for militias and terrorist organizations worldwide.
According to the Interpol, drug trade accounts for only 28%, illegal taxation 26%, and kidnappings and foreign donations 3% each while 38% of the $30.2 billion generated annually by terrorists comes from illegal deals in timber, mining, fishing, charcoal, and wildlife trafficking.
To move these illicit flow, the study conducted by the global policing agency Interpol, Rhipto, a Norwegian UN-collaborating center, and the Global Initiative Against Transnational Organized Crime, found that there are 1,000 routes used for smuggling and other illicit flows around the world.
“Organized criminals use smuggling networks that also increasingly enable foreign fighters to move across borders to safe havens, and to stockpile or ship resources by means of formal and informal networks of financial flows,”
the report says.
“Over 2,600 unaccounted-for (predominantly Islamic State) foreign fighters have left Syria and Iraq, an unknown number of them via Libya, using these illicit smuggling networks, and they use them to get access to forged papers, as well as routes to safe havens.”
The study shows that monetary practices embedded in Muslim culture, such as donating to charities and informal money-transfer centers, have compounded the difficulty in tracking down terrorist financial links.
However, Cryptocurrencies continues to face intense criticism over allegations of aiding money laundering, largely because of their pseudonymous nature. Shapeshift has been accused of laundering $9 million in the last two years, allegations that chief executive officer Erik Voorhees dismissed as “disingenuous and misleading.” More than 40 other crypto exchanges have faced similar allegations, according to a recent article by the Wall Street Journal.
Voorhees instead pointed to banks as the biggest culprits, citing a UN report which put the amount of alleged illicit flows that banks facilitate each day at $2.7 billion – about 219,000 times as much as Shapeshift is accused of laundering over two years.