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SE Asian law enforcement agencies enhance capacities to address virtual currency risks in terrorist financing

Bangkok (Thailand), 27 September 2017
- In response to the growing risk of virtual currencies (VCs) being used for terrorist purposes, the UNODC Regional Office for Southeast Asia and the Pacific convened the course "Cryptocurrency Investigation and Countering the Financing of Terrorism", to strengthen law enforcement officers' capacity to detect and investigate criminal cases related to online currencies.

The four-day training, held from 19-22 September, was attended by twenty investigators from six countries, namely: the People's Republic of China (Hong Kong Special Administrative Region), Indonesia, Japan, Malaysia, Thailand and the Philippines. The course was jointly delivered by the UNODC Terrorism Prevention Programme, Global Programme Against Money Laundering and the Global Cybercrime Programme, underpinning the importance of close collaboration among law enforcement officials responsible for cybercrime, financial crimes and counter terrorism in addressing the evolving threats of terrorist financing.

As cryptocurrencies provide fast and borderless transactions, the technologies also enable individuals to conduct transfers outside the formal banking system, whilst remaining quasi-anonymous. These features have enormous appeal to terrorist groups.

The Regional Risk Assessment on Terrorism Financing 2016, jointly conducted by Southeast Asian countries and Australia, highlights that online payment platforms are likely to be increasingly utilized more for terrorist financing, requiring a shift in approach of traditional detection and disruption methods. The assessment indicates that although these platforms are not yet commonly used for terrorism financing among ASEAN Member States, they do provide an effective and efficient means of transferring funds, which may increase their popularity in the future.

"Against the lack of harmonized approaches and regulations on cryptocurrencies, both at the regional and global levels, preventing the use of VCs at a larger scale in terrorist financing is a very important task of counter-terrorism officers", said Mr. Thomas Hansen, UNODC Senior Advisor on Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT).

During the course, the participants gained a deeper understanding on the concept of VCs within the UN frameworks against terrorist financing and the challenges they pose, both at the policy and operational levels. Guidelines on virtual currencies, issued by the Financial Action Task Force (FATF), was also outlined to help the participants apply a risk-based approach to AML/CFT measures on VCs, including the application of relevant FATF recommendations.

Through a desk-top exercise, the participants also developed specialized knowledge and technical skills to conduct effective and timely investigations on the use of VCs for terrorist and other criminal purposes. According to Mr. Alexandru Caciuloiu, UNODC Cybercrime Project Coordinator for Southeast Asia and the Pacific, "the training is especially designed to improve the understanding of law enforcement officers on the concepts and features of cryptocurrencies, including an in-depth examination of the Bitcoin ecosystem and community".

To realize this objective, the training featured an intensive practical exercise on key challenging, such as effective investigations into virtual currencies, timely tracing and identifying online money trails, the peer-to-peer (P2P) Bitcoin exchange process, seizure processes, forfeiture, and the prosecution of such cases.

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