Indonesia Tracks Online Funding of Terror Groups

Indonesia faces a substantial risk from extremists using popular online payment systems such as PayPal and Bitcoin to fund their activities, the government’s Financial Transaction Reports and Analysis Center (PPATK) said Monday.

Bahrun Naim, whom police have labeled a mastermind of terrorism in the country, has used these online services to send payments to Indonesia,  PPATK chairman Kiagus Ahmad Badaruddin told a news conference in Jakarta.

Kiagus did not say how much money had been sent from Bahrun, an Indonesian who allegedly fights for Islamic State (IS) in Syria, to IS-affiliated cells in Indonesia.

The PayPal system supports online money transfers, while Bitcoin is a digital currency transferred directly from person to person using the internet. Bitcoin was created and distributed online without any specific authority governing it.

In collaboration with the National Agency for Counter Terrorism (BNPT) and relevant ministries, the center has established specific divisions including fiscal, narcotics, terrorism, financial technology and cybercrime, to trace the flow of funds or digital-based monetary transactions, Kiagus said.

When the agency conducted a national risk assessment in 2013-15, investigators determined that militants were using technology to finance terrorism, Ivan Yustiavandana, the PPATK’s director of examination and research, told reporters.

The assessment revealed a grey area of financial technology which is used for terror financing. Monitoring requires multiple layers of checks because simple transactions done through services like PayPal and Bitcoin are at the lowest level of the financial transaction system, Ivan said.

“They chose this to avoid being detected like if they used conventional means,” he said. “The anomaly is when our monitoring is more sophisticated, they will innovate by using another system that has not been monitored.”

Online transactions

Bahrun, identified by Indonesian police as the mastermind of an IS-claimed terrorist attack that killed eight people including its four militants in Jakarta last January, has a history of using technology to finance his networks in Indonesia, according to Ridlwan Habib, a terrorism analyst at the University of Indonesia.

Ridlwan said the technology was widely used by IS to send money to cell members in their respective countries. He described Bahrun as one of the most tech-savvy militants from Indonesia who often used the method.

“Bahrun Naim and his groups have used this since he has been in Syria,” Ridlwan told BenarNews.

He said Bahrun had sent money through PayPal and Bitcoin to the wife of Arif Hidayatullah, a militant who was arrested by Indonesian counter-terrorism police unit Densus 88 in Bekasi, West Java, in December 2015. In October, Arif was sentenced to six years in prison on the charge of conspiring and helping terrorism.

Suspicious transactions more than doubled in ’16: PPATK

Online financial transactions have replaced hawala, a traditional system of remittances without any transfer of money, which allows transfers domestically and internationally without using formal financial institutions.

Ridlwan said Bahrun had used hawala to transfer money to Arif through an Indonesian female worker in Malaysia.

“The Hawala system has been abandoned by IS because international [terrorist detection] focused on this system, so they switched to financial technology,” Ridlwan said.

PPATK submitted 105 analyses of financial transactions allegedly related to terrorism from January 2013 through November 2016 after receiving 267 suspicious transaction reports from financial service providers.

Twenty-five suspicious transactions were detected in 2016, which was an increase from 12 cases in 2015. In 2014, PPATK detected 26 suspicious transactions, while in 2013 and 2012, the agency found 13 and 33 suspicious transactions respectively.

Kiagus said his agency formed a special team to interact daily with Densus 88.

“The police conduct analysis together with other countries. We also do the same with financial intelligence units in other countries and we do this in parallel,” Kiagus said.