Why Crowdfunding is a Top AML Risk for 2023
Protests across Ottawa and US-Canada border crossings in 2022 brought global awareness to the problem of crowdfunding platforms being used to finance extremist groups. Crowdfunding has also supported terrorist financing (TF) – notably, for Islamic State (IS) operatives in Syria. Reporting indicates family members of young men trapped in Syrian camps have attempted to use the Telegram messenger service to “bring them to safety.” It’s believed some of those looking to escape are doing so to fight for IS.
This year, 87 percent of survey respondents said they’d seen an increase in the use of these platforms to fund extremism, with 31 percent believing the growth to be “significant.” In a report issued on March 1, 2022, the US Treasury explained how domestic extremists have used legal fundraising methods to support their activities, making them harder to detect. The Treasury also highlighted the pandemic’s role in making these platforms “a necessity rather than a convenience.”
3 Ways Firms Can Manage Crowdfunding Risks
Alia Mahmud, Regulatory Affairs Specialist at ComplyAdvantage, pointed out that “many crowdfunding platforms have been caught short by the surging demand for their services. Crowdfunding, in conjunction with cryptocurrencies and social media, increases the risks of terrorist financing by allowing bad actors to utilize the reach of crowdfunding platforms and crypto asset technologies to gain support from followers and receive funds.”
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