Crowdfunding and Illicit Financing: Terrorism, Money Laundering, and Foreign Influence Activities
I’m taking a short break from the convoy finance series while I work on some details for the next piece. In the meantime, here’s a quick look at the vulnerabilities of crowdfunding websites for illicit financing. And a very warm welcome to our many new subscribers! Our community now stands at almost 900 members. I never thought so many people would be interested in illicit financing and other global security issues, so this is great news. If you find this interesting, please share it with a friend and help grow our community even more.
This article takes a look at how crowdfunding is exploited for terrorist financing, and how it can potentially be used for money laundering and funding foreign influence activities. While the vulnerabilities present in many crowdfunding campaigns for these activities are common across different types of financial products, the potential for exploitation by adversarial states is a rarely-discussed vulnerability, and one that might require investigative (and perhaps legislative) responses.
The terrorism - crowdfunding - social media - nexus
One of the main ways that terrorists use social media, aside from propaganda dissemination and general communications, is for fundraising activities. Many terrorist groups use social media to launch crowdfunding campaigns or general calls for donations. In some cases, the calls are explicitly for terrorist activity or groups, while in other cases, it is unclear where the money is going, and it is plausible to assume that not all donors know the money is being directed toward terrorist activities.
After a call for funds is made, donors are often redirected via Skype or Telegram or other direct messaging applications or services in which account information and transaction information is provided. Funds are sent via wire transfer, MSBs, e-mail money transfer, or hawala, although social media platforms are increasingly developing the native ability to transfer funds between users.
Want to know more? I write about this and terrorist exploitation of other financial technologies in my book, Illicit Money: Financing Terrorism in the 21st Century.
The internet and social media have significantly enabled this type of terrorist fundraising. For instance, crowdfunding can allow individuals to raise money in a short time online before law enforcement, security services, or the companies themselves become aware of how these platforms are being used.