Guarding against crypto-criminals: the EU's actions to prevent Terrorist financing through cryptocurrencies

Abstract

This study examines the role and effectiveness of the current European Union legal framework in the fight against money laundering and terrorism financing through cryptocurrencies. For this reason, this paper is structured by firstly defining terrorism and terrorist financing activities, then analyzing cryptocurrencies and the risks associated with it, mainly Anonymity. Subsequently the research will examine the current EU legal framework on Anti-Money Laundering and Countering the Financing of Terrorism, with the main institutions and actors responsible for a coherent application. As well, this investigation expresses the discrepancies and limitations of the Anti-Money Laundering Directives, and the lack of control over certain cryptocurrencies actors by the EU Framework, which results in the abuse of the cryptocurrency market by terrorist organizations to facilitate funds to engage in illicit activities. Additionally, the study cases of Hamas and The al-Qassam Brigades’ Fundraising Camp, and Al-Qaeda,demonstrates that terrorism financing through cryptocurrencies is real, and the European Union needs to have better harmonization between Member States and a more legally binding framework to leave less room for interpretation and lead the way in the fight against money laundering and terrorism financing, so that our economy can be safe from similar attacks.