Bits and pieces: Virtual money and terrorism
Simon Palombi
Simon Palombi is an intern in the Lowy Institute's International Security Program. He has previously interned with the UN Counter Terrorism Executive Directorate.
2012-11-16
http://www.lowyinterpreter.org/post/2012/11/16/Bits-and-pieces-Virtual-money-and-terrorism.aspx...
The European Central Bank recently published an official study into digital online currencies, the first by a major financial institution.
Alarmingly, the report tends to play down the suitability of these currencies to terrorist groups. In particular, the report passes off legitimate concerns, such as those raised two years ago by the Financial Action Task Force (FATF), as 'negative press'. Indeed, the report fails to account for the development and increasing market for the digital online currency known as Bitcoin, and not only its potential for use to launder money (raised by FATF), but the access it provides to weapons available via online black markets.
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However, while governments, such the US and Australia are aware of Bitcoin's potential to circumvent counter-terrorist financing measures, they have not moved fast enough to amend legislation and develop a solution. Australian counter-terrorist legislation is currently ineffective against Bitcoin because it defines electronic money as digitally stored money, either electronically or magnetically, that is backed by precious metals, or gold bullion.
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