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TERRORIST FINANCING THROUGH SOCIAL MEDIA AND CRYPTOCURRENCY

Christine Saddy, Gioia Torchia, Alison Ward, Seif Harrasy, Andreea Troneci, Paige Biebas, Martina Sclaverano

Salomon Montaguth, Editor; Deepankar Patil, Senior Editor

December 26, 2022


Social Media Icons[1]


Geographical Area | Global

Countries/Enterprises Affected | Global



On December 15, 2022, an FBI investigation revealed crowdfunding campaigns that were raising money for ISIS while masquerading as humanitarian fundraising efforts and transferring money to a cryptocurrency address linked to the organization.[2] Borderless cyberspace, instant communication, and anonymity have allowed terrorists to radicalize potential recruits across borders.[3] Global terrorists have exploited social media platforms, such as Meta and Telegram, to radicalize and recruit individuals and finance their operations.[4] The anonymous nature of cryptocurrencies, its widespread adoption, and the laxity of government regulation have attracted global terrorist organizations.[5] Ineffective social media regulations are almost certainly allowing sophisticated terrorists to exploit social media platforms. The advent of cryptocurrencies has very likely facilitated the process of obfuscating identity and transaction records for terrorist organizations to receive money. Social media, crowdfunding, and cryptocurrency companies are likely to face increased governmental regulations, raising costs of compliance and users’ fees.


Security Risk Level:


Areas of High Security Concern: The ineffectiveness of social media companies in stopping terrorist financing, and inadequate government regulations on cryptocurrency are likely allowing terrorist organizations to increase fundraising activities. Terrorist organizations are almost certainly exploiting humanitarian crises to solicit charitable donations through crowdfunding websites. The decentralized and anonymous nature of cryptocurrencies likely enables terrorists to use cryptocurrency successfully without authorities’ detection. Government regulations of cryptocurrency will likely increase in response to terrorists using the technology to receive funds. As more regulations are implemented, terrorist organizations are likely to start resorting to extortion to procure funds for their operations.

Current Claims: governments; FBI; Al Qaeda; ISIS; Global Internet Forum to Counter Terrorism (GIFCT); Tech Against Terrorism; Meta; Telegram; Facebook; Instagram; Twitter; GoFundMe

Current Attack: An FBI investigation revealed GoFundMe campaigns that were disguised as humanitarian efforts while raising money for ISIS, contributing $20,347 to a cryptocurrency address linked to the organization.[6] Terrorist organizations are exploiting the anonymous and fast-paced environment of social media, as well as the lack of financial regulations for cryptocurrency, as a way to collect money via crowdfunding activities.[7]

Major Capital Industries: social media platforms; crowdfunding websites; cryptocurrency

Potential Industry Concerns: The widespread use of social media, lack of regulations concerning cryptocurrencies, and anonymity of transactions and accounts will likely result in continued crowdfunding activities by terrorists. Social media platforms and crowdfunding websites will likely record a rise in scam profiles that benefit from the lack of verification requirements and harm users by spreading propaganda and fraudulently soliciting money. Social media and crowdfunding companies will likely suffer from reputational damage, resulting in the loss of users. Governments will likely push for tighter regulations for crowdfunding and cryptocurrency, increasing user verification policies to monitor users and transactions. Strict regulations on crowdfunding sites are likely to increase compliance costs for companies, likely resulting in increasing user fees.


Areas of Caution:

  • Geopolitical: The funding of terrorist organizations through social media allows terrorists to pay for weapons, equipment, training, messaging, and salaries.[8] Terrorist groups like Al Qaeda and ISIS use these finances to expand their influence and territorial gains, particularly throughout the Middle East. The ability for terrorists to use the internet and media is a critical tool for their expansion beyond national borders.[9] Experts reported that Facebook is one of the main platforms terrorists exploit to create networks and seek supporters.[10] Blockchain decentralization technology allows terrorists to communicate private information and transfer funds across national borders without the involvement of a third party, like a bank. The cryptocurrency activity of terrorist groups online isn’t under government authority, causing groups to transfer money efficiently.[11] Countries are organizing counterterrorism events, like the “No Money for Terror Ministerial Conference on Counter-Terrorism Financing”, as they try to establish coordination against online terrorist fundraising.[12]

  • Political: The increased use of social media by terrorists causes governments and intelligence agencies to monitor online activity and pressure websites, like Facebook, to cooperate with the government and enhance security measures.[13] Facebook previously failed to identify and monitor several pro-ISIS accounts, including deciding not to remove posts and accounts that violated its standards.[14] Facebook claimed that monitoring and eliminating all terrorist activity online violated its community standards and consumer privacy. Social media companies have proven to be ineffective in controlling malicious activity, due to a lack of time and funding towards monitoring systems.[15]

  • Social: Groups like the GIFCT and Tech Against Terrorism are calling for more regulation of social media platforms in order to prevent terrorists from exploiting them and harming society.[16] Crowdfunding and social media platforms, and their communities are losing credibility due to terrorists tricking donors into donating to terrorist activity instead of humanitarian aid, undermining genuine humanitarian efforts.[17] They also use social media platforms to create echo chambers where terrorist organizations create a sense of community and belonging and disseminate training manuals in order to radicalize individuals.[18] These fringe digital spaces and communities give the impression of widespread agreement that helps finance terrorism.[19]


Predictive Analysis:

  • Who: Terrorists will very likely continue targeting donors on crowdfunding platforms due to the anonymity these platforms provide. Governments and cybersecurity companies will very likely advocate for more regulations on cryptocurrency technology and social media content moderation. Law enforcement agencies will very likely counter terrorist financing through social media by using more advanced tools for detection, like artificial intelligence (AI) technology. Crowdsourcing and social media platforms will very likely oppose the call for more regulations, which will likely result in continued scams and terror financing.

  • What: Terrorist groups and their sympathizers will very likely increase their fundraising campaigns to finance operations. This will likely create skepticism toward humanitarian aid missions and crowdfunding platforms, resulting in decreased funding for legitimate causes. Terrorists will very likely capitalize on the decentralized and anonymous nature of cryptocurrency to move funds across borders without government monitoring. There is a roughly even chance that an increase in regulations for crowdfunding and social media companies will result in terrorists resorting to extortion of users to gain funds.

  • Why: The growing popularity of cryptocurrency will likely result in its ubiquitous use and increased ease of receiving funds for terrorist groups. Terrorist sympathizers will very likely capitalize on the government’s struggle to monitor cryptocurrency activity. The lack of identity requirements to create social media accounts, and lack of verification of crowdfunding projects, likely allow terrorists to execute a wide range of activities such as propaganda, cyber fraud, and money laundering.

  • When: Online terror financing is an ongoing threat that is likely to increase as social media options grow. As new ways of transferring money appear, like cryptocurrency, terrorist organizations will almost certainly incorporate these new methods of funding. Governments are unlikely to create regulations for cryptocurrency in the short term due to its high technical requirements. They will likely increase regulations of social media and crowdfunding companies in the medium term.

  • How: Terrorist organizations will very likely capitalize on the growing number of cryptocurrencies and social media platforms to increase their likelihood of engaging with users and raising funds. As the usage of cryptocurrency spreads, terrorist organizations will almost certainly utilize the anonymity of blockchain to increase their online financing efforts. They will very likely move these fundraising schemes to new social media platforms before the platform’s security measures are emboldened, and exploit changing regulations of companies like Twitter.


The Counterterrorism Group (CTG) recommends that all countries invest in online intelligence gathering to monitor potential terrorist uses of social media. Major social media companies should revise their policies on online transactions, increasing personal identification requirements to execute any transaction. Social media service providers should collaborate and share information on potential terrorist financing activities and block accounts of terrorist financiers, fundraisers, and facilitators. Social media should alert its users about potential scams and misleading funding activities so that users verify the projects that they donate to. Cryptocurrency platforms should provide transparent records of all transactions to enable governments and non-governmental organizations to investigate suspicious financial patterns.


CTG will continue to monitor the use of social media as a terrorist funding method. The CTG’s Worldwide Analysis of Threats, Crimes, and Hazards (W.A.T.C.H) Team will remain vigilant in monitoring any signs of terrorist fundings campaigns and deter potential attempts before they happen.

 

[1] "Social Media Mix 3D Icons" by Wikimedia licensed under Creative Commons Attribution 2.0 Generic

[2] Ontario man charged in FBI investigation into alleged ISIS financial support, The Star, December 2022 https://www.thestar.com/news/canada/2022/12/15/ontario-man-charged-in-fbi-investigation-into-alleged-isis-financial-support.html

[3] Potential for spread of terror through social media higher than ever: Govt, Business Standard, December 2022, https://www.business-standard.com/article/current-affairs/potential-for-spread-of-terror-through-social-media-higher-than-ever-govt-122121300676_1.html

[4] Ibid

[5] Terrorist Use of Cryptocurrencies, Rand Corporation, 2019, https://www.rand.org/pubs/research_reports/RR3026.html

[6] Ontario man charged in FBI investigation into alleged ISIS financial support, The Star, December 2022 https://www.thestar.com/news/canada/2022/12/15/ontario-man-charged-in-fbi-investigation-into-alleged-isis-financial-support.html

[7] Emerging Terrorist Financing Risks, FATF, October 2015 https://www.fatf-gafi.org/media/fatf/documents/reports/emerging-terrorist-financing-risks.pdf

[8] How Does Terrorist Financing Work?, Financial Crime Academy, n.d., https://financialcrimeacademy.org/how-does-terrorist-financing-work/

[9] The Real World Capabilities of ISIS: The Threat Continues, Center for Strategic and International Studies, September 2020, https://www.csis.org/analysis/real-world-capabilities-isis-threat-continues

[10] Why Can’t Facebook Take Down All Terrorist Content?, Newsweek, January 2018, https://www.newsweek.com/why-cant-facebook-take-down-all-terrorist-content-782598

[11] How Decentralization Works in the Cryptocurrency World, Cryptonomy, October 2021, https://crypto-economy.com/decentralization-of-cryptocurrency/

[12] Social media platforms being used to raise funds for terror activities: NIA DG, The Economic Times, December 2022, https://economictimes.indiatimes.com/news/india/social-media-platforms-being-used-to-raise-funds-for-terror-activities-nia-dg/articleshow/95584229.cms

[13] Terrorism and the internet: How dangerous is online radicalization?, National Library of Medicine, October 2022, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9606324/

[14] Why Can’t Facebook Take Down All Terrorist Content?, Newsweek, January 2018, https://www.newsweek.com/why-cant-facebook-take-down-all-terrorist-content-782598

[15] Ibid

[16] The Use of Social Media and Alt-Tech Platforms by Threat Actors, The Counterterrorism Group, January 2022, https://www.counterthreatcenter.com/post/the-use-of-social-media-and-alt-tech-platforms-by-threat-actors

[17] Ontario man charged in FBI investigation into alleged ISIS financial support, The Star, December 2022, https://www.thestar.com/news/canada/2022/12/15/ontario-man-charged-in-fbi-investigation-into-alleged-isis-financial-support.html

[18] SOCIAL MEDIA – A TOOL FOR TERRORISM?, The Security Distillery, September 2020, https://thesecuritydistillery.org/all-articles/social-media-a-tool-for-terrorism

[19] The Influence of Social Media Platforms on Terrorist Financing, Sanction Scanner, 2019-2022, https://sanctionscanner.com/blog/the-influence-of-social-media-platforms-on-terrorist-financing-667

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