Many policymakers and scholars have discussed concerns regarding terrorist group use of cryptocurrency in recent years. While some argue that the threat is still limited, others argue that the ...current usage of cryptocurrency does not match the entirety of features that terrorist groups require and desire. In the end, it is still critical to recognize that the cryptocurrency used for terrorist financing frequently depends on several influencing factors. This study aims to (i) investigate the utilization of cryptocurrency by Moslem-affiliated terrorists in Southeast Asia; (ii) map the case typology of cryptocurrency use in Southeast Asian terrorist funding; (iii) describe the regulatory challenges raised in Southeast Asia. This research is a type of doctrinal legal one using the statute, case, and conceptual approaches. The results of this study acknowledge the limited but increasing risk of terrorist financing by cryptocurrency over the 2015-2022 timeframe in Southeast Asia. Furthermore, the existing typology of cases uses smurfing and structuring techniques with high and medium levels of risk. This research ends by recommending actions that Southeast Asian country stakeholders can take to reduce the potential of cryptocurrency usage in terrorist funding by harmonizing their counter-terrorist financing regulatory approaches and implementing investigative best practices.
The financing of terrorism is the most critical aspect in the growth of terrorism, and combating the financing of terrorism is the most crucial aspect to eliminating the roots of terrorism. Suppose ...the actions of governments and international financial and non-financial organisations successfully combat the traditional methods of financing terrorism. In that case, terrorists will move beyond conventional methods and turn to new financial technologies. Due to features such as anonymity, creation of security layers and decentralisation, virtual currencies, especially Bitcoin, are among the financial innovations that criminals, including terrorists, pay attention to for investment and financing. In this article, we will see in a detailed review how Bitcoin, regardless of whether it can be considered a valid currency in the future, by changing the financial systems, has become attractive to illegal networks and can create a revolution in financing terrorism.
ABSTRACT
This study examines whether we can learn from the behavior of blockchain‐based transfers to predict the financing of terrorist attacks. We exploit blockchain transaction transparency to map ...millions of transfers for hundreds of large on‐chain service providers. The mapped data set permits us to empirically conduct several analyses. First, we analyze abnormal transfer volume in the vicinity of large‐scale highly visible terrorist attacks. We document evidence consistent with heightened activity in coin wallets belonging to unregulated exchanges and mixer services—central to laundering funds between terrorist groups and operatives on the ground. Next, we use forensic accounting techniques to follow the trails of funds associated with the Sri Lanka Easter bombing. Insights from this event corroborate our findings and aid in our construction of a blockchain‐based predictive model. Finally, using machine‐learning algorithms, we demonstrate that fund trails have predictive power in out‐of‐sample analysis. Our study is informative to researchers, regulators, and market players in providing methods for detecting the flow of terrorist funds on blockchain‐based systems using accounting knowledge and techniques.
Modern times are marked by the march of preventive theories of punishment. Prevention is a promise of benefit, of social utility, as accordingly the practices of punishment promise us an impact on ...future offending. Preventionism has often been understood as a problem and even as a threat, since setting such a vague goal on our criminal law and criminal justice, we might risk loosening all the limiting principles concerning what can be done by means of criminal law. It is precisely these concerns that have triggered a growing interest in the topic. In the following, we will first present some historical lines of development which have prepared us for a turn towards prevention. Interventionist policies of the state towards society are nothing new themselves. My own take on the subject will be exemplified in a discussion of two recent areas of intensive international regulation: money laundering and terrorist financing.
In recent years, the scale of criminal activity has reached alarming levels and the globalisation of the financial services industry and advances in technology have made the financial aspects of ...crime increasingly complex. Money laundering and terrorist financing are most often carried out by economic entities. Accounting professionals in general and financial auditors in particular occupy positions that enable them to fight criminal acts of this nature. The overall aim of the research is to assess the extent to which the financial auditor can contribute to the prevention or mitigation of money laundering and terrorist financing at the level of audited companies, following the adoption of legislative changes. More specifically, the first direction of this research consists in identifying and analyzing the variables that characterize the susceptibility of the involvement of companies, listed on the BSE on the regulated market, in acts of money laundering and terrorist financing in the period 2019-2020 by sector of activity. The second direction of the research aims to assess the extent to which the financial auditor can contribute to preventing and combating money laundering and terrorist financing by identifying and reporting the factors of occurrence of risks of this nature as key audit issues. Statistical methods of multivariate data analysis are used to test the research hypotheses.
Purpose
Money laundering and terrorism financing use the banking sector system illegally and result in enormous losses for the state and nation. Regulatory Technology (RegTech) is an important part ...of effectively preventing money laundering and terrorism financing. However, the implementation of RegTech related to the prevention of money laundering and terrorist financing, especially in the Indonesian banking sector, has not been widely studied and discussed. Therefore, this study aims to provide empirical testing evidence regarding the effectiveness of RegTech implementation in the Indonesian banking sector to prevent money laundering and terrorist financing.
Design/methodology/approach
This study uses primary data obtained through a survey distributed to 160 bankers who work in eight different banks in Indonesia with a 95% confidence level and a confidence interval of 7.75. The criteria needed to determine the sample in this study are individuals who actively work as staff whose work is directly related to banking; individuals who are actively working in banks registered with OJK; individuals who have been actively working in the banking sector in Indonesia for at least three years. The data that has been obtained were analyzed using the SmartPLS application to test the validity and reliability, descriptive statistics and structural models (inner model).
Findings
The results of this study indicate that electronic know your customer (eKYC), transaction monitoring (TM), cost and time efficiencies (CTE) influence the prevention of anti-money laundering (AML) and countering financing of terrorism (CFT) in the Indonesian banking sector. However, eKYC and CTE have little influence on AML-CFT in the Indonesian banking sector. Meanwhile, TM has a moderate influence on AML-CFT in the Indonesian banking sector. In addition, in general, most bankers agree that the bank they work for has followed the guidelines, policies and regulations that have been given.
Originality/value
This study uses the Indonesian banking sector as a research subject that raises the effectiveness of the implementation of the use of RegTech to prevent money laundering and terrorism financing.
Abstract
The effectiveness of the Financial Action Task Force (FATF) international regime to govern anti-money laundering (AML) and counterterrorist financing (CTF) has been questioned since its ...establishment. In theory, the FATF's network of multilevel actors should protect the integrity of the international financial system. The empirical evidence in this article shows that the FATF has made a difference in ensuring states' (official) compliance with its measures, using extrinsic motivation tools; for example, ranking noncompliant states. However, it argues that such motivation only ensures actors' minimum compliance, meaning that the regime's effectiveness is suboptimal, while fostering intrinsic motivation would improve actors' performance. Therefore, it is essential to understand why actors comply with the FATF approach and how they could be persuaded to achieve better compliance so that the regime's effectiveness is feasible. This article explores these questions, using interviews with thirty practitioners in three locations, supported by a qualitative analysis of documentary data.
Purpose
This paper aims to examine the current situation in Afghanistan after the rapid withdrawal of US troops and the Taliban takeover of the country, and how this has shed new light on the ...financing of terrorism.
Design/methodology/approach
Informal interviews were conducted with alleged perpetrators as well as formal interviews with compliance experts to further investigate the subject of terrorist financing in the wake of the latest changes in Afghanistan and terrorist financing through hawala banking. The interviewees were analysed through a qualitative analysis.
Findings
Based on the interviews, it was concluded that both illegal and legal sources of income could be used by terrorist financiers. This study also shows why hawala represents a significant challenge for counter-terrorist financing policies.
Originality/value
While existing literature sufficiently links parallel banking systems, such as hawala, to terrorist financing, this study shows the implications for Switzerland’s perceived commitment against financial crime in light of current changes in Afghanistan, and in addition, certain dogmatic weaknesses of Article 260quinquies of the Swiss Penal Code are critically analysed.
Purpose
This study aims to evaluate the suspicious transaction reporting (STR) as a financial intelligence tool to identify the potential strengths and limitations of STR and to come up with the ...criteria, which will make this tool an effective one in early detection of terrorist financing activities.
Design/methodology/approach
Considering the research aim, this research uses the funnelling method for identifying effectiveness criteria. Funnelling is a method of literature review that helps find pertinent literature by refining the search through filtering the available research (Ridley, 2008). Using this method, the researcher first applied the criteria of actionable intelligence to filter the financial intelligence tools to select the most promising and important tool (suspicious transaction reporting) for early detection of terrorist financing activities. The funnelling method was also applied to derive the effectiveness criteria from the operational features, and corresponding limitations, of the suspicious transaction reporting system. The funnelling method was also used to identify those operational features and limitations of suspicious transaction reporting that have the most direct relevance to the early detection problem of suspicious transaction reporting.
Findings
There are some operational features of STR that give rise to certain limitations that undermine its effectiveness in terms of early detection of terrorist financing activities. The limitations of STR necessitate a search for criteria that will make STR effective in early detection of terrorist financing activities. Based on the operational features and their corresponding limitations, effectiveness criteria for STR have been derived in this study. It is shown how these effectiveness criteria can remove the limitations of STR.
Research limitations/implications
The list of operational features and the corresponding limitations based on which the effectiveness criteria have been derived may not be exhaustive. There may have other operational features, and corresponding limitations that also make STR largely ineffective in the early detection of terrorist financing activities, and for which more effectiveness criteria should also be derived.
Practical implications
The limitations and the effectiveness criteria will pave the way for redesigning STR in such a way that will make it highly useful for detecting financing activities relating to imminent terrorist attacks.
Social implications
The society will experience fewer terrorist attacks that will make the society peaceful, happy and vibrant.
Originality/value
In this study, the effectiveness criteria of STR for early detection of terrorist financing activities have been derived in an innovative way by deducing them from the operational features of STR and the corresponding limitations.
