ISIS is using cryptocurrency platforms to conceal donations and get around financial security measures, experts have revealed after a surge in advertising for donations.

They fear the terrorist groups missing $300 million (Dh1.1 billion) war chest could have been transferred into a digital currency to hide it from the authorities.

Last year ISIS used cryptocurrency to fund the Easter Sunday terrorist attack in Sri Lanka, which killed more than 250 people when suicide bombers attacked churches and hotels in quick succession.

The Counter Extremism Project, a think tank, tracked the trend in a new report, Cryptocurrencies and Financing of Terrorism: Threat Assessment and Regulatory Challenges, launched in an online seminar on Monday.

Its director, Hans-Jakob Schindler, who has worked in the UNs security council monitoring unit for ISIS and Al Qaeda, told The National the authorities have searched for the groups missing war chest since 2017.

Im wondering if from 2017 to 2020 there has been $300m that we have not found and thats why Im thinking this might have been one of the ways it might have been used, Mr Schindler said.

This would be an ideal storage mechanism until it is needed. If done right, it would be unfindable and unseizable for most governments.

ISIS is believed to be the first terrorist group to be prosecuted in court for cryptocurrency activities.

US teenager Ali Shukri Amin was jailed for 11 years in 2015 for providing ISIS supporters with an online manual on how to use Bitcoin to conceal donations.

Mr Schindler said there had been consistent cases of ISIS and Hamas using cryptocurrency since 2014.

From the get go, ISIS has been clearly interested in what can be done with this new technology, he said.

Dr Schindler said that when digital transactions were broken up into smaller transactions it was next to impossible for them to be traced back.

Cryptocurrency is good for terrorists if they become public because it enables more people to fund them without running the risk of being discovered or stopped, he said.

Dr Schindler is urging EU governments to collaborate on a regulatory framework for tighter regulations.

For once you can be ahead of the curve and have time now to work on regulations before it becomes a $100m problem, he said.

Yaya Fanusie, of the Foundation for the Defence of Democracies think tank, has been studying terrorist groups use of cryptocurrency since 2016.

Mr Fanusie said he first noticed a rise in advertisements for digital donations on crowdfunding sites.

He said the publication of ISISs digital currency handbook in 2014 was an important milestone.

It shows exactly when supporters of the group looked at ways to make money throughout the world for the ISIS battlefield, Mr Fanusie said.

It has grown in sophistication. Instead of one blockchain address there are multiple addresses that are difficult for law enforcers to track.

"We are talking software you can download and you do not have to go through an exchange.

He said the saving grace so far was that people need to cash out and that limits their movements.

We are going to have to be ahead of the game, Mr Fanusie said.

Last year a report by US security group the National Security Research Division called for international co-operation between law enforcement and the intelligence community in dealing with the problem.

The speed at which these technologies are adopted, and the details of which technologies are used and how they are deployed, are critical uncertainties that have important operational impacts, it said.

This analysis suggests that regulation and oversight of cryptocurrencies, along with international co-operation between law enforcement and the intelligence community, would be important steps to prevent terrorist organisations from using cryptocurrencies to support their activities.

Updated: May 19, 2020 02:51 AM

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Fears missing ISIS millions are hidden in cryptocurrency ready for use as war chest - The National