Cryptocurrencies are no longer an alien concept, thanks to their worldwide popularity and acceptance. In the recent HM treasury paper, digital currencies were declared to pose a “low risk” when it comes to concerns about the financing strategies of terrorist groups. According to the report, the UK's economic and finance ministry believes that cryptocurrencies do not play a substantial role in funding terrorist activities.
The report reads, “unlike most other criminals, the raising and moving of funds is not a terrorist’s primary aim […] The UK does not typically see large-scale coordinating fundraising activity for terrorist groups. Recent terrorist attacks across Europe have demonstrated that the costs involved can be very low; for example, as low as hiring or stealing a vehicle or purchasing knives.” The paper concludes that it is highly unlikely that the use of digital currency for terrorist funding will increase in the new few years.
The National Crime Agency (NCA) is also of the opinion that the role of cryptocurrency in money laundering for terrorists is low and not a cause for great concern. In the UK National Risk Assessment released two years ago.
The UK National Risk Assessment said:
“There are a limited number of case studies upon which any solid conclusions could be drawn that digital currencies are used for money laundering. There are concerns around anonymity, faster payments, and ability to provide cross border remittances and facilitate international trade. These issues are similar to issues identified with many other financial instruments, such as cash and e-money.”
However, it went on to say, “the money laundering risk associated with digital currencies is low, though if the use of digital currencies was to become more prevalent in the UK this risk could rise.”
Drafters of the document acknowledged the fact that the adoption of digital currencies as a payment method is increasing and has found its way in all sectors of businesses. The latest report expects that, as these currencies become more mainstream, the risk of money laundering associated with them will also increase.
The report reads, "as the number of businesses accepting digital currency payments grows, there is an increasing risk of criminals using the currencies to launder funds without needing to cash out into non-digital, or 'fiat' currencies."
However, this is subject to change, of course, as the situation will be re-evaluated during the next Treasury report in 2022.