Security Brief: Illicit Finance and Economic Threats (IFET) Week of April 3, 2022
April 3 - 6, 2022 | Issue 2
Jennifer Kelly, Illicit Finance and Economic Threats (IFET) Team
Carlos Hochberger, Editor; Hannah Norton; Editor; Jennifer Loy, Chief of Staff
Poppies growing in a field
Date: April 3, 2022
Parties involved: Afghanistan; The Taliban; Afghanistan-based poppy farmers; International community; USA; UN; ISIS-K
The event: The Taliban has banned poppy farming in Afghanistan with the aim of receiving recognition from the international community. By combating the opium market, the Taliban hopes sanctions on Afghanistan, which are negatively impacting the banking and business sectors and furthering a humanitarian crisis in the country, will be relaxed. In 2021, Afghanistan’s opium industry was worth approximately $2.7 billion USD. Poppies are the primary source of income for millions of Afghan farmers, who use opium as a form of banking to purchase food staples including flour and oil. The Taliban stated that failure to comply with the ban will result in violators receiving punishment according to the Sharia law.
Analysis & Implications:
It is unlikely the Taliban’s ban against poppy farming will encourage the international community, particularly the US and the UN, to lift economic sanctions on Afghanistan due to the Taliban’s history of terrorist activity, particularly following their takeover of Kabul. If Afghanistan’s overseas financial assets are unfrozen, the Taliban will very likely use the funds to strengthen their operational capabilities and exert greater control over the Afghan people.
It is very likely the Taliban would utilize greater funds to purchase weapons and combat the threat from ISIS-K who conduct terrorist attacks across Afghanistan instead of assisting the humanitarian crisis. ISIS-K would likely respond to the Taliban by reinforcing their own resources and intensifying terrorist attacks in Afghanistan. An increase in terrorist attacks would very likely escalate the humanitarian crisis for the Afghan people, likely leading to greater pressure on the healthcare system and an increase in poverty levels.
The threat of Sharia law will very likely result in poorer Afghan communities, like Herat, engaging in alternative forms of illicit activities, such as human or organ trafficking, to generate funds. Other Afghan farmers will likely emigrate with their families in hopes of finding more employment opportunities elsewhere. Forcing impoverished Afghan people to search for more extreme income opportunities will almost certainly increase feelings of resentment towards the Taliban regime. There is a roughly even chance Afghan communities will revolt against the Taliban and start an insurgency in response to the poppy bans.
Date: April 4, 2022
Parties involved: UK; UK law enforcement; Her Majesty's (HM) Treasury; UK Finance Minister John Glen; British cryptocurrency users; EU; USA
The event: The UK announced plans to create a global cryptoasset hub and utilize blockchain technology to assist consumers in making payments more efficiently in the future. Glen said the UK intends to introduce stablecoins, a cryptocurrency that is less volatile than crypto-coins and designed to hold a stable value making them more practical for commerce. Glen also outlined the intention to regulate the wider cryptocurrency market to include crypto-coins, such as Bitcoin. The UK’s focus on regulations follows the EU’s recent drafting of a law to regulate cryptocurrency markets. Analysis & Implications:
Stablecoins and cryptocurrency regulations will likely create greater transparency in the UK market by implementing controls against illicit cryptocurrency activity. UK citizens will very likely feel greater security when investing their money, likely generating more interest in the cryptocurrency market. An increase in investors combined with stricter regulations will almost certainly increase the flow of legitimate businesses to the UK, likely creating more jobs and establishing financial security for many individuals. If the regulations reduce illicit financial flows through the UK cryptocurrency market, other countries will very likely adapt their own stablecoins and cryptocurrency regulations.
Regulating the cryptocurrency market will almost certainly enable UK law enforcement to identify a greater number of illicit cryptocurrency transactions. Regulations will likely include verifying cryptocurrency users’ identities, likely decreasing criminals’ ability to remain anonymous. Organized criminal groups will likely move their UK-based cryptocurrency operations to non-European countries with no regulations on the market, such as the US, to evade detection.
________________________________________________________________________ The Counterterrorism Group (CTG)
 Afghanistan: Taliban outlaws growing of lucrative opium poppy as it seeks easing of sanctions, Sky News, April 2022, https://news.sky.com/story/afghanistan-taliban-outlaws-growing-of-lucrative-opium-poppy-as-it-seeks-easing-of-sanctions-12581378
 Britain sets out plan to exploit crypto potential, Reuters, April 2022, https://www.reuters.com/business/finance/uk-says-it-will-regulate-stable-coin-payments-2022-04-04/