A recent arrest by federal authorities reveals that ISIS supporters are diversifying their fundraising tactics—right from the comfort of the United States.
The Department of Justice (DoJ) released a statement that Pakistan-born US citizen Zoobia Shahnaz engaged in several bank fraud schemes to launder money through Bitcoin and other cryptocurrencies with the purposes of transferring those funds to Islamic State agents. She has been charged with conspiracy to commit money laundering, as well as six specific counts of money laundering with bank fraud. In all, Shahnaz allegedly procured $85,000 through her various schemes.
The crux of the crime was essentially Shahnaz’s attempt to “hide” the flow of cash to terror groups by using money she already had to purchase crypto-cash and then transfer those funds to regular bank accounts overseas.
Reports did not specify where exactly these “overseas” destinations were. However, reports did indicate that after completing her work on the scheme, Shahnaz attempted to leave the United States and travel to Syria. Apparently it was during this attempt that she was stopped and arrested by authorities.
Federal attorney Bridget M. Rohdes, who is heading the case, told media sources that “the indictment reflects the resolve of this office, together with our law enforcement partners, to investigate and prosecute anyone who would seek to support terrorists, including those who would perpetrate financial crimes to do so.” Rohdes also recognized the efforts of the FBI’s Joint Terrorism Task Force and other federal law enforcement agencies in uncovering Shahnaz’s crimes.
For this very reason, criminal groups have begun to capitalize on newer financial systems that offer more potential secrecy, like Bitcoin.
It is important to read between the lines a bit when Ms. Rohdes speaks about what this “indictment reflects.” It does not speak only to the efforts of federal agencies in uncovering terror funding plots in the US, but also the types of plots these agencies are now on the lookout for.
And here is a clue:
Local media in the Long Island area where Shahnaz lived, quoted William Sweeney, assistant director of the FBI’s New York office, that the case gives insight into the new methods ISIS is resorting to in order to replenish “dwindling financial support.” This means that methods that terror networks were using in the past are now, for reasons likely to do with the successful crackdown of governmental agencies, becoming ineffective.
Traditional financial networks allow for too much transparency, as regulations require banks and other financial institutions to cooperate with law enforcement in order to prevent money laundering plots. In the past several years, as global terror organizations like ISIS have bloomed, this has become the international norm.
For this very reason, criminal groups have begun to capitalize on newer financial systems that offer more potential secrecy, like Bitcoin. What makes crypto-currencies so appealing to criminals is the ability to circumvent conventional systems and maintain anonymity. The community of cryptocurrency users are constantly improving the secrecy factor of these monetary tools. Work by researchers earlier this year, for instance, demonstrated that program overlays can be used by transferring parties to further obscure the source and destination of the digital cash flow.
Interestingly, news of Shahnaz’s arrest comes at the same time that the international community is learning of North Korea’s alleged hacking schemes targeting the South Korean Bitcoin exchange.
There are both good and bad signs from these revelations. On the one hand, they show that criminal actors, rogue states or jihadists alike, are branching out into the murky digital currency world in order to fund their activities. On the other, they also demonstrate that governments are in pursuit.
With any luck, international law enforcement will continue to adapt to this new emerging trend of cyber-crime.
