The Role of Cryptocurrency in Terrorism Financing: The Nigerian Context

Abstract

The intersection of terrorism and its financing mechanisms has evolved dramatically with the advent ofdigital currencies, particularly cryptocurrency. This paper explores the role of cryptocurrency infacilitating terrorism financing within the Nigerian context, an issue of increasing concern for nationalsecurity. Structured into five parts, this study begins with an introduction that sets the stage forunderstanding the complexity of terrorism financing in Nigeria and the emergence of cryptocurrency asa disruptive financial technology. The second part delves into the historical evolution of terrorism inNigeria, charting its growth and the diverse methods employed to sustain these illegal activitiesfinancially. This section provides a comprehensive overview of the socio-political factors that haveenabled terrorism to flourish and examines the traditional and contemporary avenues of funding theseactivities. This part also provides an in-depth exposition on the role of cryptocurrency in terrorismfinancing within Nigeria. This section critically analyses the attributes of cryptocurrency that make itan attractive tool for terrorists, including anonymity, decentralisation, and the challenges it poses totraditional financial oversight. Case studies and examples specific to Nigeria will be discussed tohighlight how digital currencies are being exploited for nefarious purposes. In the third part, the focusshifts to the response of Nigerian regulatory agencies, particularly the Central Bank of Nigeria (CBN),in combating terrorism financing. This section assesses the effectiveness of current regulations andenforcement strategies, highlighting both successes and areas needing improvement. It also considersthe broader implications of Nigeria\u27s approach in the context of global efforts to combat terrorismfinancing. Finally, the fourth part offers a set of recommendations aimed at enhancing Nigeria\u27scapacity to mitigate the risks associated with cryptocurrency-enabled terrorism financing. Theserecommendations are designed to strengthen regulatory frameworks, improve inter-agencycoordination, and promote international collaboration. The paper concludes with a fifth part bysummarising the key issues discussed and reinforcing the need for robust, adaptive measures to addressthe evolving threat of terrorism financing in the digital age