- The Washington Times
Wednesday, January 15, 2020

A neo-Nazi organization received a donation of nearly 14.88 bitcoins or roughly $60,000 in the days following the 2017 white supremacist riots in Charlottesville, Virginia.

Hamas — an Islamist Palestinian group that calls for the death of Jewish people everywhere — set up a website for visitors to make bitcoin donations.

Terrorists, both domestic and foreign, are increasingly using bitcoin for illicit transactions because it is nearly impossible to track, law enforcement officials and scholars told a congressional committee Wednesday.

The House Committee on Financial Services held the hearing as it mulls legislation to crack down on terrorism financing.

“As cryptocurrency becomes more prevalent and the technology becomes easier to adopt and use, we do believe we will see more use of that in the domestic terrorism realm,” said Jared Maples, director of the New Jersey Office of Homeland Security.

Cryptocurrencies like bitcoin are favored by criminals because they can be transferred without a central bank or transfer service such as PayPal, which can freeze accounts or report suspicious activities to law enforcement.

The transactions are not linked to names, physical addresses or any other identifier. The anonymity has made it difficult for law enforcement to link transactions to users.

But Congress and the witnesses struggled to find answers on how to scrutinize such transactions more closely without sacrificing privacy rights.

“How do we do it in such a way that we are able to track this money but not be so involved in their lives they feel its government intrusion,” asked Rep. Juan Vargas, California Democrat.

Mr. Maples said the government needs to balance oversight and processes to ensure privacy concerns are met, but offered a few details.

Lawmakers also took aim at credit card companies and financial institutions saying they need to flag suspicious transactions.

Rep. Jennifer Wexton, Virginia Democrat, called on such firms to share suspicious spending with law enforcement.

Stephen Paddock spent nearly $95,000 on firearms in the months leading up to his shooting and killing of 59 people at a Las Vegas country music concert in 2017. Pulse nightclub shooter Omar Mateen spent roughly $26,000 on weapons and ammunition before he shot and killed 49 people in 2016.

George Selim, senior vice president for programs at the Anti-Defamation League, agreed the financial institutions need to share information with law enforcement.

“More can be done,” he said. “There can be more information sharing. There can be more transparency reporting as well as training for trust and safety teams at financial institutions that may see abnormalities in purchases of firearms or bulk purchases of ammunition.”

Mr. Maples called on Congress to bring terrorism charges against those who financially support such organizations. Currently, those who fund terror groups face can only be prosecuted as providing material support for terrorism, which carries a more lenient sentence.

“When financial systems are used to fund these terrorist activities, they are seen as independent of the acts,” he said. “When you’ve used illicit funding schemes and it ends up in a violent act … it should be treated as terrorism. Getting your support on that side would be huge for us.”

The Finance Committee is mulling multiple bills to block terrorism financing. Only one of those bills has passed the House and is currently awaiting debate in the Senate.

That bill, known as the Counter Act, would change federal banking laws to make financial institutions more accountable to share suspicious activity. It also calls on the Treasury Department to explore ways to detect illicit money transfers.

• Jeff Mordock can be reached at jmordock@washingtontimes.com.

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