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Bitcoin Terror Financing Case in SA Highlights Crypto Regulation Challenges

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Hoorzook, 35, stands accused of using R11,500 worth of Bitcoin to fund Al-Sadaqah, a Syrian-based organisation alleged to have supported militant activities. While the payments were made in 2017, when Al-Sadaqah was not yet listed as a terrorist organisation, the National Prosecuting Authority (NPA) has charged him under multiple acts, including:

  • Protection of Constitutional Democracy against Terrorist and Related Activities Act
  • Regulation of Foreign Military Assistance Act
  • Firearms Control Act

Hoorzook denies the allegations, stating his intent was charitable and not linked to terrorism. His bail application has been postponed to January 22, when the case will be heard in the Lichtenburg Magistrate’s Court.

Cryptocurrency: A Tool for Terrorist Financing?

The case highlights a growing trend: the use of cryptocurrencies to bypass traditional financial systems. Reports, such as the Soufan Center’s 2024 study, underline how terrorist groups increasingly rely on virtual assets due to their speed, privacy, and global accessibility.

While cryptocurrencies like Bitcoin are traceable, privacy coins such as Monero are becoming the preferred choice for anonymity.

Al-Sadaqah, for instance, openly solicited Bitcoin donations via social media platforms like Telegram, describing their operations as aiding militants in Syria with weapons and financial support.

South Africa’s Grey List Challenge

The Financial Action Task Force (FATF) grey-listed South Africa in 2023, citing insufficient enforcement of anti-money laundering (AML) and counter-terrorism financing (CTF) measures.

Although South Africa has robust legislation in place, including mandatory reporting by crypto exchanges like Luno, the FATF requires evidence of consistent and effective enforcement.

This case presents an opportunity for the FIC to demonstrate the country’s commitment to meeting FATF’s standards and regaining its reputation as a secure financial jurisdiction.

Crypto Exchange and FIC Responses

  • Luno’s Compliance:
    Luno, the exchange Hoorzook used to purchase Bitcoin, confirmed its compliance with AML legislation, including reporting suspicious activities to the FIC.
  • FIC’s Role:
    The FIC clarified that it supports law enforcement with financial intelligence but does not conduct investigations. Its insights are shared with agencies like the Hawks, SARS, and the State Security Agency for prosecution and asset forfeiture.

The Bigger Picture: Cryptocurrencies and Terrorism

As terrorist groups adapt to counter-terrorism financing measures, governments, financial institutions, and tech platforms must collaborate to close loopholes.

While this case may highlight Bitcoin’s vulnerabilities, it also underscores the need for stronger regulatory frameworks and enhanced public-private partnerships to combat misuse.

South Africa’s efforts to prosecute Ziyadh Hoorzook signal a broader commitment to addressing crypto-enabled crime and escaping the FATF grey list.

This landmark case could redefine the role of cryptocurrency regulation in tackling global terrorism financing, positioning South Africa as a leader in enforcing AML and CTF measures.

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