In May 2020, the Philippine Institute for Peace, Violence and Terrorism Research (PIPVTR) reported that Islamic State (IS)-linked terror groups had conducted their first transactions in cryptocurrencies. According to the report, a terrorist-linked money laundering operation involving cryptocurrencies generated funds, which were then allegedly used to finance the activities of terror networks operating in the conflict-ridden Mindanao region in the southern Philippines.
While the adoption of cryptocurrency is not unprecedented among IS supporters, this case signals a reinvigorated push to diversify funding tactics for terrorism in Southeast Asia. As such, this article explores the propensity for Southeast Asian militants to adopt cryptocurrency for fund raising, fund moving, and fund using for terrorist purposes.
Terrorist Exploitation of Cryptocurrency in Southeast Asia
IS has long been interested in cryptocurrency. In a high-profile case from 2015, a 17-year-old in the U.S. state of Virginia was jailed for providing IS supporters online with advice on using the virtual currency Bitcoin to conceal financial donations. He had also written a prominently referenced blog titled “Bitcoin and the Charity of Jihad.”
In Southeast Asia, an early proponent of using cryptocurrency for terrorism financing was Bahrun Naim, an Indonesian IS fighter based in Syria (now deceased). In his online manual published in 2016, Naim listed Bitcoin as one of the fund-moving methods to launder the proceeds from “carding” (fraudulent credit card transactions). At the time, Indonesia’s Financial Intelligence Unit PPATK (Indonesian Financial Transaction Reports and Analysis Centre) reported Bahrun Naim had moved monies to his associates using PayPal, with the funds originated from Bitcoin. The money was eventually used to fund a suicide attack at the Solo Police Headquarters, Central Java, in July 2016.