The fight against terrorist financing is more complex than ever. The Financial Action Task Force (FATF) has released its July 2025 “Comprehensive Update on Terrorist Financing Risks,” and the findings are essential reading for AML professionals. Despite years of global effort, the FATF found that 69% of jurisdictions still have major deficiencies in investigating and prosecuting terrorist financing cases. Terrorist groups are highly adaptive, exploiting both traditional and digital financial systems and employing a variety of strategies to avoid detection. Here are the report’s key takeaways for financial institutions — along with strategies for enhanced detection.
1. Cash Remains King — But Patterns are Changing
Cash remains the most prevalent payment method for terrorist financing, with terrorist groups continuing to rely on the anonymity, ease of use and low traceability of cash transactions. However, decentralization is reshaping how cash is used. Cash transactions are becoming smaller and harder to detect as smaller, self-financed cells and lone actors move money in lower amounts to avoid triggering AML thresholds.
2. Digital Platforms Offer Anonymity & Reach
Digital platforms such as social media, messaging apps, and crowdfunding sites enable bad actors to recruit, share propaganda and solicit funds from witting and unwitting donors — while taking advantage of the speed, reach and anonymity of these methods to hinder detection. As technology evolves and terrorist groups embrace new tactics, traditional detection methods may fall short.
3. Criminal Convergence Is on the Rise
Terrorist financing is increasingly intertwined with other organized criminal activity, including drug trafficking, human trafficking, extortion and smuggling. Terrorist groups are leveraging the same networks used by criminal organizations to raise and move funds — channels that offer anonymity and global reach. Terrorist groups may also collaborate directly with organized crime networks, exchanging protection, logistics or intelligence in return for financial support.
4. NPOs as a Terror Financing Risk
Terrorist groups continue to abuse NPOs as conduits for raising and moving funds. These organizations are attractive targets due to their legal status, access to donor funds and presence in high-risk regions. Legitimate charities and NPOs are at low risk for exploitation — the majority of terror financing activity related to this sector occurs in the form of sham NPOs created to solicit donations and funnel illicit proceeds.
5. Exploitation of Natural Resources
Terrorist groups exploit natural resources to fund their operations, especially in regions with weak governance and limited financial oversight. This tactic often involves extortion and taxation of resource-based industries, control of illicit trade routes and the use of front companies to mask illicit resource exploitation.
Effective AML/CFT Solutions for Terrorist Financing Detection
As terror groups leverage new technologies to fund their heinous crimes, the financial industry must invest in innovation to face emerging challenges. The shift towards decentralization of terrorist financing and its convergence with other crimes — along with growing use of digital platforms and continued exploitation of NPO structures and natural resources — underscores the need for targeted AML/CFT solutions. Institutions should consider solutions that combine cross-channel analysis and consortium insights to effectively root out terrorist financing risks by analyzing behavioral indicators and risky patterns. This approach, combined with effective and comprehensive EDD processes, can help provide insights into risk that go beyond simple transactional data. By working together and investing in technology, the financial industry can continue to play a vital role in the global fight against terrorism.
To learn more about targeted detection of terror financing and other predicate crimes, download our Targeted Typologies feature sheet.
