A Bit of Recent Growth: The Evolving Risk of Terrorist Use of Virtual Currency - Money Laundering, DVC and Bitcoin in Dark Web Markets, Anonymizing Software, Law Enforcement and FinCEN Capabilities - U.S. Government, Paperback

• Release Date   3/18/2019
• ISBN-13   9781090799166 | 978-1-09-079916-6
• ISBN   1090799160 | 1-09-079916-0
• Format   Paperback
• Author(s)   U.S. Government
• The use of decentralized virtual currencies (DVCs) by terrorist organizations (TOs) on a significant scale could present unique challenges for regulators, policy makers, and law enforcement because they offer the potential for an illicit funding network that can be very difficult to disrupt or even detect. However, the body of existing research regarding the threat of terrorists' use of DVCs has determined that though it has become the payment method of choice for cybercriminals and many transnational criminal organizations, researchers do not believe that TOs will leverage DVCs on an appreciable scale in the near future. To justify their determinations, prior researchers cite insufficient market size, anonymity, and broad commercial acceptance, coupled with a perceived lack of TOs' technological sophistication, as limits to the practical use of DVCs over other better-established and less complicated terror funding methods. They further suggest that existing AML/CFT regulations, narrowly applied to DVC exchanges should be sufficient to catch terror financiers. However, this thesis identifies recent developments in DVCs and the ecosystems that support them that suggest all of the primary pillars on which prior research has been built may have eroded sufficiently to warrant further investigation into the potential threat posed by terrorist use of DVCs. The homeland security enterprise must not be lulled into complacency by what this thesis finds to be already outdated research.I. Introduction * A. Significance Of The Research Question * B. Literature Review * 1. High Threat Assessments * 2. Low Threat Assessments * C. Research Design And Sources * D. Thesis Overview And Chapter Outline * Ii. Background: Virtual Currency, Contemporary Terror Finance, And The Regulations Designed To Keep Them Separate * A. Introduction * B. The Design Features Of Digital Virtual Currencies * C. Contemporary Terror Finance * D. Existing AML/CFT Regulations * E. Conclusion * Iii. Market Size And Commercial Acceptance Swells * A. Introduction * B. Growth In DVC Market Capitalizations And Liquidity * C. Commercial Acceptance And Network Growth * D. Conclusion * Iv. Greater Anonymity And Technological Sophistication Of Terrorist Organizations * A. Introduction * B. Developments In Anonymizing Financial Technology * 1. Anonymizing Software * 2. Dark Web Markets * 3. Privacy-Enhancing Tools for Early DVCs * 4. Newer Privacy Enhanced DVCs * C. Growth Of To Technological Sophistication and Dvcs Ease Of Use * 1. TO Technological Sophistication Grows * 2. DVCs' Ease of Use Improves * D. Conclusion * V. Conclusion: Law Enforcement Capabilities And The Need To Reevaluate The Threat * A. Law Enforcement Capabilities Or Lack Thereof * B. Further Research And Investigation Are NeededThis compilation includes a reproduction of the 2019 Worldwide Threat Assessment of the U.S. Intelligence Community.