KARACHI: Police in Pakistan say the use of digital currencies, including bitcoin, for international terror financing, as well as crimes such as extortion and ransom, is on the rise as authorities move to crack down on illegal methods of money transfer.
Bitcoin is the most common virtual currency and is used as a vehicle for moving money around the world quickly and anonymously via the web without the need for third-party verification.
Militant groups worldwide, including Daesh, are increasingly calling on supporters to donate using the digital currency.
Pakistan recently moved to meet 27 targets set for it in 2018 when the South Asian nation was placed on a Financial Action Task Force (FATF) “grey list” of countries with inadequate controls over terror financing. The task force has urged Pakistan to complete an internationally agreed action plan by February 2021. The next virtual plenary of the task force is scheduled for February 22-25.
“We are seeing this trend (of using bitcoin for crimes) since we tightened the noose around illegal systems of transferring funds,” Raja Umar Khattab, head of the Transnational Terrorists Intelligence Group in Sindh’s counterterrorism police, told Arab News.
Last month, Khattab arrested Hafiz Muhammad Omar bin Khalid, a Pakistani engineering student charged with sending bitcoin donations to militants in Syria.
Khalid had transferred over Rs.1 million ($6,200) when he was caught, according to Omar Shahid Hamid, counterterrorism department (CTD) deputy inspector general.
The student had also previously been arrested, and released, in 2018 for extending financial support to an Al-Qaeda militant in Afghanistan, officials said.
In December 2019, Khalid came across a Telegram account online that guided him on how to help the widows of Daesh militants in Syria.
“Help jihadis and their families by sending money through bitcoin,” said one user on the Telegram group, leading Khalid down a rabbit hole of searches into bitcoin wallets. That, in turn, led him to an associate named Zia Shaikh Turk, based in Hyderabad, who converted cash into bitcoin and sent it off to “jihadi brides” in Syria, according to Hamid.
The Pakistani widow of a militant, whom Khalid identified as Umm-e-Bilal, also asked him to open a mobile wallet account, according to interrogation reports made available to Arab News.
“Umm-e-Bilal asked me to open an EasyPaisa (Pakistani digital payment system) account as some of her acquaintances hadn’t heard of bitcoins, but wanted to contribute,” one intelligence report said, quoting Khalid. “I got Rs. 450,000 into my account, added another Rs. 100,000 of my own, converted them into bitcoin and sent them to Syria.”
Last year, a US citizen of Pakistan origin, Zoobia Shahnaz, was sentenced to 13 years’ imprisonment for providing material support to foreign militant organizations, specifically more than $150,000 to Daesh.
Shahnaz, 27, from Long Island, admitted to wiring more than $150,000 to…