A new FATF report has been published titled ‘Ethnically or Racially Motivated Terrorism Financing’, which looks at the threat from right-wing extremist threats.
The report cites two case studies of ERW (extreme right-wing) groups that have turned to crypto-assets after being shunned by the traditional financial sector due to hate speech terms of service violations, stating that “Without the ability to process credit card payments, some groups have moved to using virtual assets like Bitcoin to move funds.” The FATF adds that “Some ERW groups have used so called “privacy coins”, i.e. VAs that allow a user to maintain total anonymity when making blockchain transactions.”
Notably, at the beginning of 2021, a mob illegally forced their way into the United States of America’s Capitol building, a riot that caused 140 injuries and 5 deaths either shortly before, during, or after. One month before the event, alt-right groups were found to have received 500,000 USD in BTC donations from Laurent Bachelier, a French national.
The attack and BTC donations revelations put ERW groups and domestic terrorism – how the FBI classified the attack – into the spotlight, as well as the role that crypto-assets play in terrorism financing. The FATF report on Ethnically and Racially Motivated Terrorism Financing references both the Proud Boys and QAnon, a “far-right, neo-fascist […] organization” and “far right-wing network”, which were both widely cited as playing a key role in the Capitol riot.
The FATF – Financial Action Task Force – is the global financial crime watchdog that regularly publishes compliance industry standards, guidelines and reports on different aspects of financial crime, including crypto-assets.
Read: FATF Crypto Guidance: Updates on VASPs & VAs
Recently, the FATF Plenary – 20-25th June – was concluded, which conducted its second 12-month review of the global implementation of the watchdog’s standards on VASPs and virtual assets.
The review found that few countries had imposed Recommendation 16, aka the ‘Travel Rule’ and that “So far, 58 out of 128 reporting jurisdictions advised that they have now implemented the revised FATF Standards, with 52 of these regulating VASPs and six of these prohibiting the operation of VASPs.”
Read: The Key To Compliance with Travel Rule Regulations
“Few users and owners of virtual assets and blockchain technologies set out to commit crimes. However, the small minority that do, can wreak egregious effects on law-abiding society. Domestic and international terrorism do by far the most damage and are threats that deserve the close attention of the private and pubic sector. By working in tandem with Coinfirm, protocols, organizations and companies working in the crypto-asset space can combat the dangers outlined in this FATF report.” – Barbara Hałasek, Coinfirm’s Head of Regulatory Affairs