ATbar Leveraging Middlemen, Big Data and Crypto Currency to Counter Terror Financing

Leveraging Middlemen, Big Data and Crypto Currency to Counter Terror Financing

13/05/2019 | by Vilenko, Ofer  

The increasing use of cryptocurrency to fund terror organizations as well as criminal activity raises the question of how we should fight this phenomenon and curtail its very existence, use and effect.

The question is magnified in light of the adoption of blockchain protocols by the financial and insurance industries. This adoption signifies that blockchain technology has surpassed the trust and reliability threshold of the financial industry and as such its adoption may be the harbinger of the demise of systems such as SWIFT etc.

In light of the proclaimed anonymity of blockchain transactions, the demise of SWIFT for instance, will deny law enforcement and counter terrorism agencies major monitoring/enforcement tool and thus raises the need to develop counter measures.

This policy paper will advocate the need to form an international public-private alliance that will form and maintain a centralized database from which each law enforcement and counter terrorism agencies may draw in order to disrupt the flow of funds to and from terror organizations as well as gather admissible evidence that may be used if and when said terrorist will be put on trial.

Although further analysis is required in order to crystalize the exact content of such database, the main idea behind it to cross reference between known (and to be discovered as the database develops and more information is gathered and/or contributed by the participating members) terror operatives/terror facilitators/middlemen (“Middlemen” or “MM”) online activity’s metadata and cryptocurrency activity that is known to fund terror endeavors and/or terror organizations and other terrorist actors (“Terror Actors” or “TA”).

Much like mushrooms grow and spread, the thought behind the database is that over time, enough nexuses will be formed, more and more MMs and TAs will be identified and mapped out and law enforcement agencies will be able to regain the tool that is likely to be lost once cryptocurrency will take hold in mainstream business activity.

In other words, the database will attempt to map out the financial supply chain of TAs. Once so mapped, law enforcement agencies will be able not only to monitor that supply chain but also disrupt its operation and prosecute every link in the chain (the “MM”) as well as the “end user”, i.e. the actual terrorists on the ground.

This policy paper will additionally advocate that such a measure is an economic necessity in today’s global economy as the economic damage as a result of a terror attacks (aggregated on either global or local scales) far outweighs any resource allocation required to form and maintain such a data base (both in terms of hard direct damage numbers as well as in terms of citizen well-being and productivity).

Furthermore, the technology to form, maintain and utilize such a repository already exists and in fact what this policy paper suggests is not dissimilar to the big data technologies used by the likes of FANG companies (Facebook, Amazon, Netflix, Google etc.) to advertise to its users. Thus, the cost to form and maintain the suggested data base should not be prohibitive.

Moreover, this policy paper will advocate that the cost of formation and maintenance of the suggested database should be split among all participants (percentages TBD) while every participant will have full access to the information in the data base, thus increasing the appeal of participating in the alliance, as every participant is likely to get “more bang for his buck” compared to an alternative of having to build and maintain their own local system, not to mention the access to information that otherwise would have been potentially missing should such participant had opted to run their own “local” operation.

Finally, this policy paper will advocate that the above may be achieved without additional infringement to any person’s right to privacy or other protected human rights as the type of data that will initially be collected and stored on the shared data base will be such that will comply with most current regulatory privacy regimes and any additional information will have to undergo prior judicial review.


   This article is part of the RED-Alert project, funded by the European Union’s Horizon                                 2020 research and innovation Programme under grant agreement No 740688.

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