Cyprus is coming for crypto. Its Institute of Certified Public Accountants (ICPAC) has dropped a “terror financing alert” to fight the use of crypto in funding terrorism.
Reportedly, this has been bothering the regulator for quite some time. In the letter, it said it wants to start monitoring all types of transactions and make the KYC measures even stricter. ICPAC added that:
“Terrorist financing is an increasing threat nowadays and may take place using both legitimate and illegitimate funds. The primary tool for mitigating the terrorist financing risk is transaction monitoring.”
They stressed that the amount of money in the transactions doesn’t really matter. The ICPAC said there are five main ways of fund transfer that are typically used to fund terrorism.
Through financial institutions, electronic money institutions (EMIs), payment institutions, crowdfunding platforms, and cryptocurrencies. Each one of them carries an equal risk with the others.
For example, terrorists sometimes use bank accounts registered under the guise of charity or unrelated parties to transfer the funds. They also often use accounts in non-EU banking institutions, which makes tracking incredibly difficult.
Source: ICPAC
ICPAC pleads with them to ask important questions like, “Is the account registered under the name of the charitable organization/NPO?” and “Are the contributions received from the donors located in the same country as the NPO?”
Another issue is the geographical profile of the transfers. Funds sent to or received from certain areas close to known terrorist groups should automatically be major red flags.
The regulator believes terrorists use crypto assets for anonymous cross-border peer-to-peer transfers thanks to the convenience of blockchain. They also receive cryptos through crowdfunding or charities in the form of donations.
ICPAC said that professionals must start using specialized blockchain investigation tools to monitor suspicious wallets, screen, and review them correctly. It wants them to activate wallet screening on all available screening tools and use them all the time.
Reporting by Jai Hamid