Researchers at Singapore’s prestigious International Centre for Political Violence and Terrorism Research have said the use of crytpocurrencies by jihadists in South-East Asia is in its infancy, but has the potential to expand – especially given the unregulated nature of cryptocurrency in Indonesia. V. Arianti and Kenneth Yeo Yaoren wrote on The Diplomat Japanese website that groups linked to Islamic State in the region first carried out cryptocurrency transactions in May 2020. According to the Philippine Institute for Peace, Violence and Terrorism Research, the relatively small transaction of under 1,000 dollars was allegedly sent to finance networks in the conflict-ridden Mindanao region of the southern Philippines. Jihadists face the problems of a limited pool of tech-savvy militants in the region, plus poor internet connectivity in areas like Mindanao. But the researchers warned that the May 2020 case “signals a reinvigorated push to diversify funding tactics for terrorism in Southeast Asia”, and flagged up the possibility of jihadists soliciting donations or calling for an initial coin offering (ICO) to get unwitting investors to invest. Or else they could conduct a crypto-ransom kidnap – a tactic employed by criminals elsewhere. Jihadists could explore using cryptocurrency to procure logistics, especially with more merchants accepting payment in cryptocurrency online with access to international supply chains. Both components involve fund-moving, which the authorities cannot track until it reaches the beneficiary’s bank account, the analysts wrote.

…V. Arianti and Kenneth Yeo Yaoren are Associate Research Fellow and Research Analyst respectively at the International Centre for Political Violence and Terrorism Research (ICPVTR), a constituent unit in the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU), Singapore.