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Crowdfunding, virtual assets seen as emerging terror financing threats
The FRC says that crowdfunding through social media is manifesting itself as an emerging threat to terrorism financing, enabling money to be raised through donations or investments from multiple individuals.
The Financial Reporting Centre (FRC) has sounded an alarm over the emergence of social media crowdfunding and the use of virtual assets as new terrorism financing risks, at a time Kenya is fighting to shake off a grey-listing by a global anti-money laundering watchdog last year.
In its latest assessment of Kenya’s exposure and preparedness to fight dirty cash, the FRC observes that terrorists have embraced the use of social media platforms to mobilise for funding, as well as gravitated towards virtual assets to conduct undetectable financial transactions.
The report notes that virtual assets’ inherent features of anonymity, cross-border nature and high speed of transfer present major challenges to law enforcement authorities in investigating, tracing and seizing such assets.
“In Kenya, crowdfunding through social media is manifesting itself as an emerging terrorism financing threat, enabling the raising of money from donations or investments from multiple individuals,” wrote FRC.
“The listed inherent features (of virtual assets) make it possible for raising, movement and storage of funds meant for terrorism financing with minimal chances of tracing the source and purpose of funds.”
The agency has further faulted the lifting of a three-decade arms embargo on Somalia that was effected via a United Nations Security Council resolution in December 2023, which it says now allows delivery of weapons and military equipment to Somalia.
“Lifting of this embargo is projected to increase Al-Shabaab access to weapons, owing to the high level of corruption reported on the Somali government as well as the significance wielded by Al-Shabaab within Somalia,” said FRC.
“The use of the additional weapons is likely to sustain or escalate the ongoing terrorist attacks castigated by Al-Shabaab in Kenya, especially in regions closer to the border within Somalia.”
Terrorism sympathisers
Other emerging vulnerabilities listed in the report include the use of internet payment systems and prepaid cards, use of terrorism sympathisers and proxies, as well as abuse of legal structures established for the fight against terrorism financing.
This publication was, however, unable to obtain FRC’s comments on measures to curb the emerging risks as calls and text messages to the agency went unanswered by press time.
The new threats add on to traditionally reported terror funding enablers that include loopholes in the banking systems and those of micro-finance institutions, as well as dangers associated with the rising usage of mobile money.
In February last year, the global anti-money laundering watchdog Financial Action Task Force, grey-listed Kenya amid concerns about loopholes and low commitment to fighting money laundering, terrorism financing and proliferation financing.
The FATF is an inter-governmental organisation set up to combat money laundering and terrorism financing by setting global standards and checking if countries adhere to them.
