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Interpol flags 14 for crypto-linked terror financing in Kenya
Criminals prefer to use cryptocurrencies instead of the formal banking system to move large sums of money because it carries a lower risk of being detected by law enforcement or the traditional banking systems, which are required to submit suspicious transaction reports.
Fourteen suspects in Kenya have been flagged for financing of terrorism activity through virtual assets, including cryptocurrency, the global police body Interpol said on Wednesday.
Four of the flagged suspects in Kenya have been arrested as part of an operation across six African countries targeting terrorism financing and the illegal activity supporting it.
The crackdown has resulted in 83 arrests across six African countries, including Angola, Cameroon, Kenya, Namibia, Nigeria, and South Sudan, as well as the identification of 160 persons of interest.
“In Kenya, a suspected money laundering operation using a virtual asset service provider was identified as having potential links to terrorism financing. The scheme, worth approximately $430,000 (Sh55.55 million), involved 12 people, two of whom have so far been arrested,” Interpol said.
“In a separate case in Kenya, two individuals were arrested for the online recruitment of young people from East and North Africa into terrorist groups. The funds used for the recruitment and radicalisation were traced through a cryptocurrency trading platform, back to individuals in Tanzania,” it added.
Virtual assets have become a focus point for terror groups seeking to ride on digitalisation to increase profitability. Terror groups have significantly increased their attention to cryptocurrency as a digital means of payment.
Cryptocurrencies, or crypto assets, are digital forms of money that are not issued or regulated by any particular monetary authority and are traded online. An example is Bitcoin and USDT, which are backed by the US dollar.
The crooks exploit the inherent pseudonymity and decentralised nature of cryptocurrencies to conduct money laundering and other crimes related to corruption.
The criminals prefer to use cryptocurrencies instead of the formal banking system to move large sums of money because it carries a lower risk of being detected by law enforcement or the traditional banking systems, which are required to submit suspicious transaction reports.
A large number of Kenyan firms are now using cryptocurrencies for payments to foreign suppliers whenever there are dollar shortages or a weakening of the shilling, the International Monetary Fund revealed recently, piling pressure on the government to mainstream the payment option.
President William Ruto last week signed the Virtual Asset Service Providers Act, establishing a legal framework to regulate cryptocurrencies and other digital assets.
The law creates a dual-regulator model where the Central Bank of Kenya licences virtual assets like stablecoins, while the Capital Markets Authority supervises exchanges, brokers, and trading platforms. The Kenyan law has borrowed from established practices from other countries like the United States and Britain.
The CBK and CMA will oversee crypto wallet providers, exchanges, payment processors, brokers, investment advisors, asset managers, initial coin offering providers, administrators, and miners, all of which will be needed to secure a license from the regulator.
