U.S. Treasury: Bitcoin Used In Money Laundering, Terrorist Financing

The U.S. Department of the Treasury today released (archive) two documents with the stated aim of helping the public and private sector understand the methodology used by supposed criminals to facilitate money laundering and terrorist financing. The two documents – titled the National Money Laundering Risk Assessment (NMLRA) and the National Terrorist Financing Risk Assessment (NTFRA) – cite Bitcoin as just one method supposed criminals use to launder money and supposedly fund terrorist organisations such as ISIL/ISIS.

From the NMLRA document, the Treasury claims:

Convertible virtual currency administrators and exchangers conducting business in the United States are subject to the same BSA regulations as other money transmitters. However, the rapid evolution of the market, the development of new business models and entry of new virtual currency payments developers and providers—many from a non-financial services environment (e.g., the technology sector), where industry is not as highly regulated as in the financial sector—together with the potential to operate without a domestic presence, is leading to service providers entering the market that do not comply with BSA obligations. The Secret Service observes that criminals are looking for and finding virtual currencies that offer:

  • Anonymity for both users and transactions
  • The ability to move illicit proceeds from one country to another quickly
  • Low volatility, which results in lower exchange risk
  • Widespread adoption in the criminal underground
  • Trustworthiness

Referencing prosecutions in relation to the use of Bitcoin, Liberty Reserve, e-Gold and WebMoney, the Treasury goes on to admit that the risk profile of such transactions is low due to the small amounts transacted. That section reads:

Money transmitters provide an essential service for immigrants and non-immigrants who cannot or choose not to use banks to send money home to family overseas. The money laundering consequence of allowing the typical $200-$400 remittance to be processed without verifying customer identification is low. Money transmitters with effective AML programs help to deter money laundering by filing timely SARs that flag structuring and other suspicious activity. The industry, however, is large, which makes maintaining adequate oversight to ensure BSA compliance a continuing challenge. Virtual currencies operating illegally are a vulnerability for banks and other MSBs, because for virtual currencies to operate in the United States their exchangers have to be able to send and receive payments through the domestic financial system. Unlicensed virtual currency administrators and exchangers, like other unlicensed money transmitters and money launderers, use nominees, front companies, and shell companies to open accounts in order to disguise the true nature and purpose of their transactions. Identifying and prosecuting unlicensed and unregistered money transmitters remains a priority for FinCEN and U.S. law enforcement.

Moving to terrorist financing, the Treasury writes:


In addition to the various methods of raising funds described above, U.S. authorities are closely monitoring TF activity to identify potential new strategies of fundraising that may be employed by terrorist organizations. For example, a variety of terrorist organizations, including AQ and Hizballah, could use successful cybercrime schemes employed by criminal actors to directly steal funds, or alternatively, steal information or other assets that could then be sold in online black markets. Terrorist organizations may also use various identity theft schemes to raise funds, particularly given the substantial revenues that can be generated from these schemes. While terrorist groups have stolen credit cards to raise funds in the past, as well as to evade detection by law enforcement, the proliferation of stolen identities and their sale in various online forums make them an attractive fundraising scheme.


U.S. authorities are also actively monitoring attempts by ISIL to raise funds from U.S. persons and move funds through U.S. financial institutions. While ISIL receives the vast majority of its revenue from criminal and terrorist activities in Syria and Iraq, including the exploitation of local resources, extortion of the local population and KFR, coalition efforts to disrupt these sources of funding may force ISIL to look elsewhere for new revenue, including increasing fundraising from individuals in the United States. U.S. law enforcement authorities have identified isolated cases of U.S.persons who have provided or attempted to provide funds to ISIL, as well as U.S. persons who have traveled or attempted to travel overseas to serve as foreign terrorist fighters with or otherwise support ISIL. Additionally, ISIL may also seek to exploit Iraqi and Syrian bank branches or other financial institutions that it controls to conduct international transactions, which would allow it to more easily receive foreign funds to finance its activities as well as send payments abroad to procure weapons and other goods to sustain itself. U.S. authorities, working with international partners, are taking measures to prevent ISIL from accessing the international financial system, including U.S. financial institutions.


As detailed in the National ML Risk Assessment, virtual currencies such as Bitcoin and other emerging payments technologies, while representing an opportunity for financial innovation, have attracted the attention of various criminal groups, and may be vulnerable to abuse by terrorist financiers. For example, the U.S. Secret Service has observed that criminals are looking for and finding virtual currencies that offer anonymity for both users and transactions; the ability to move illicit proceeds from one country to another quickly; low volatility, which results in lower exchange risk; widespread adoption in the criminal underground; and trustworthiness. In terms of TF risk, there has been some speculation about using virtual currency to transfer funds overseas. For example, a posting on a blog linked to ISIL has proposed using Bitcoin to fund global jihadist efforts.

In light of this risk, U.S. law enforcement authorities have aggressively investigated and prosecuted individuals and entities that have attempted to use virtual currencies for illicit activities. Liberty Reserve, for example, a virtual currency based in Costa Rica, its principal founder, and six others were charged in federal court in New York in 2013 with money laundering and illegally operating as an unlicensed money transmitter. The defendants were convicted in 2013 and 2014. Before founding Liberty Reserve, the business’s principal had been convicted in the United States for operating “Gold Age,” an E-Gold exchanger. The Secret Service estimates that Liberty Reserve had more than one million users worldwide, with more than 200,000 in the United States, and processed more than $1.4 billion of transactions annually. The transactions processed through Liberty Reserve involved payments associated with credit card fraud, identity theft, investment fraud, computer hacking, drug trafficking, and child pornography.

With an eye to both stopping financial crime and permitting socially beneficial financial innovation to occur, U.S. regulators have sought to develop a coherent framework for regulating emerging payment
systems and virtual currencies. Given the attractiveness of virtual currency to conduct illicit financial transactions, the possibility exists that terrorist groups may use these new payment systems to transfer funds collected in the United States to terrorist groups and their supporters located outside of the United States, although the degree to which this presents a residual TF risk is unclear.

And what is the evidence provided by the Treasury Department that ISIL/ISIS is using, has used or is considering using Bitcoin? The document cites an article (archive) published by CoinDesk in July of 2014 which itself cites an article (archive) published by Sky News which references a document titled Bitcoin and the Charity of Violent Physical Struggle as evidence that ISIS could use Bitcoin. That document was authored by none other than 17 year old Ali Shukri Amin aka @AmreekiWitness1 who earlier this week plead guilty to "conspiring to provide material support to terrorists."

Ali Shukri Amin's publication is referenced in the U.S. Derpartment of Justice statement of facts relevant to that case. It reads:


5. On or about June 26, 2014, the defendant started the Twitter account: @AmreekiWitness, which boasted over 4,000 followers. The defendant used the account as a pro-ISIL platform during the course ofover 7,000 'tweets.' Specifically, the defendant used this account to conduct twitter-based conversations regarding ways to develop financial support for ISIL using on-line currency, such as Bitcoin,and ways to establish a secure donation system or fund for ISIL.

6. The following are examples of the defendant's use of Twitter in furtherance of his conspiracy to provide material support to ISIL:

a. On or about July 7, 2014, using the @AmreekiWitness account, the defendant tweeted a link to an article he authored entitled "Bitcoin wa' Sadaqat al-Jihad" (Bitcoin and the Charity of Jihad). Thelink transferred the user to the defendant's blog, where the article was posted. The article discussed how to use bitcoins and how jihadists could utilize this currency to fund their efforts. Thearticle explained what bitcoins were, how the bitcoin system worked and suggested using Dark Wallet, a new bitcoin wallet, which keeps the user of bitcoins anonymous. The article included statements on how to set up an anonymous donations system to send money, using bitcoin, to the mujahedeen.

b. On approximately August 1, 2014, the defendant showed support for ISIL and his desire to help garner financial support for those wanting to commit jihad. Through @AmreekiWitness the defendant discussed methods to provide financial support for those wanting to commit jihad and for those individuals trying to travel overseas.

c. On approximately August 19, 2014, the defendant showed support for ISIL and desire to support ISIL. The defendant tweeted that the khilafah needed an official website "ASAP," and that ISIL could not continue to release media "in the wild" or use "JustPaste." Through various tweets, the defendant provided information on how to prevent the website from being taken down, by adding security anddefenses, and he solicited others via Twitter to assist on the development of the website.

7. The defendant also operated an Amreeki Witness page on the website ask.fm. The defendant used these accounts extensively as a platform to proselytize his radical Islamic ideology, justify and defend ISIL's violent practices, and to provide advice on topics such as jihadists travel to fight with ISIL, online security measures, and about how to use Bitcoin to finance themselves without creatingevidence of crime, among other matters.

8. The defendant also created the pro-ISIL blog entitled, "Al-Khilafah Aridat." On this blog, the defendant authored a series of highly-technical articles targeted at aspiring jihadists and ISILsupporters detailing the use of security measures in online communications to include use of encryption and anonymity software, tools and techniques, as well as the use of the virtual currency Bitcoin as a means to anonymously fund ISIL.

Teenagers authoring text files and publishing them to a BBS or the net for free is nothing new, but God only knows what it cost the U.S. Treasury to author and publish today's tripe and the U.S. DoJ to prosecute a teenager for doing what teenagers do best.

  1. Suspended from Twitter. 

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