As per local news portal RBC, citing media agency Tass, the chief of Russia’s Federal Security Service (the FSB’s successor) reported on the latest updates in the international terrorist networks at a meeting of the heads of security agencies of Commonwealth of Independent States (CIS) member states.
“Electronic payment systems and cryptocurrencies are increasingly being used by terrorists to move money received from some states and organizations that support the global terrorist network,” Bortnikov noted.
He said that terrorist financing relies on direct proceeds from the illegal sale of oil, the slave trade, and other criminal activities. The FSB chief also claimed that the primary source for supplying militants is the informal value transfer system referred to as ‘hawala’. The latter enables involved parties to conduct transfers through brokerage netting without using financial documents.
Last year, Bortnikov told Russian media that international terrorist organizations were improving the systems related to cryptocurrencies, electronic banking, and encrypted communication to defend against special services.
The FSB chief stated that there were about 5,000 terrorist group members close to the borders of the CIS countries in the north region of Afghanistan.
Earlier this month, CCN reported that ISIS used Bitcoin to finance the suicide bombing in Sri Lanka, which resulted in 253 civilian deaths, as per blockchain intelligence firm Whitestream.
Russia’s Largest Bank Seeks Client’s Crypto Data
Russia is preparing to combat terrorist financing by targeting retail banking clients. Sberbank, Russia’s largest bank, asked a customer to provide information on crypto earnings within five days. According to a Facebook post, the bank was also interested whether the client had any equipment for mining and the documents confirming the rights of ownership or lease on the equipment.
The letter was sent on May 15 and published on Facebook by Vladimir Smerkis, co-founder of crypto-trading platform provider Toxenbox.io.
According to Smerkis, the letter was sent to a Sberbank customer who wants to stay anonymous. The client transferred to the Sberbank account an amount received from the exchange of cryptocurrencies, informing the bank about this. However, the lender cited federal law No. 115, which addresses money laundering and terrorist financing, and asked the client to provide further details on his crypto-related income.
Many commentators on Facebook didn’t believe that Sberbank would go so far, but Russian Forbes confirmed the letter is real.
Bitcoin Could ‘Ruin’ Russia
When it comes to cryptocurrencies, Russia isn’t concerned about terrorism financing only. In fact, top officials are worried that the new asset type has the potential to literally annihilate a state. Nikolay Arefyev, Russia’s First Deputy Chairman of the State Duma Committee on Economic Policy, who stated at a press conference that the cryptocurrency would have been contributed to the withdrawal of the entire Russian capital to offshore accounts.
Since 1994, about 210 trillion rubles have flown from Russia. The sum represents half of the country’s budget for a year, thus greatly affecting the local economy. The Tax Justice Network estimated that Russia was among the biggest losers in terms of capital moving to offshores.
About $800 billion of Russian capital was withdrawn to offshore accounts from 1970s to 2010 / Source: Tax Justice Network
According to Arefyev, if a cryptocurrency existed in those years, the figure would be even scarier, with all the existing capital being at risk of leaving Russia in offshore accounts. The deputy said:
“If the cryptocurrency had been worked then, we would have been completely ruined today, given that all financial capital […] would be taken out of Russia, and the country would have ended. The cryptocurrency was created specifically to ensure that the state has no control over financial flows.”
Nonetheless, Russia knows how to convert the benefits of bitcoin, at least this is what we can conclude from the Mueller Report. The US document, which touches upon the investigation of Russian interference in the 2016 Presidential Election, claims that Russian military intelligence used bitcoin to buy anything from domains to VPNs.