Terrorist financing is still a huge issue as the world changes and technology develops. The three key trends for compliance folks, financial crime analysts, and lawyers in 2025 are the increasing use of crowdfunding platforms by terrorists; the rise in lone actors and homegrown extremists funding terrorism; and the impact of the new FATF grey and black lists. All of these present new challenges for financial institutions and regulators trying to manage risk without unduly impacting efficiency.
Crowdfunding as a Vehicle for Terrorist Financing
Crowdfunding sites, which were originally set up to help entrepreneurs, artists and good causes, have also been used by terrorist groups and their supporters. According to the FATF (2023), terrorists have used these platforms in several ways: running campaigns that appear to be for humanitarian or charitable purposes; selling goods to raise funds; and launching appeals during times of international crisis to raise sympathy donations. In some cases, donors quickly convert donations into virtual currency and send it across borders, making the money very difficult to trace.
The big issue is that most crowdfunding seems legitimate. Transactions are generally small, peer-to-peer, and look like normal donations. Without deeper analysis, it's very difficult to spot illicit activity. To that end, compliance teams should watch for campaign oddities such as a vague campaign objective, a sudden spike in small donations from a high-risk area, or a promoter with a very small online footprint. Any movement of funds into a virtual asset wallet outside the platform also needs monitoring.
To operationalise monitoring, you could implement several rules. For instance, you could mark any campaign that takes in over 25 donations from different sources in 24 hours (particularly if the average donation is under $100). You could use velocity checks to identify a campaign that is funding up very quickly in a short time and doesn't follow the normal organic pattern (e.g., several small transactions all going in within a few hours). Geolocation filters could trigger an alert for donations from jurisdictions that are high risk for terrorist financing or from countries that have just been added to the grey list. You could also implement a rule to flag repeated transfers from platform-linked accounts to virtual asset wallets or prepaid cards that exceed a certain cumulative threshold (e.g., $1,000 in a week). Increased due diligence would be warranted for a campaign creator whose identity is not verifiable or whose digital footprint is very light. Good practice includes adding checks on the campaign starter, monitoring the source of the donations, and quickly reporting any concerns to the appropriate financial intelligence units.
Lone Actors and Domestic Terrorism Financing
In addition to the organised groups, the problem of lone actors and domestic violent extremists (DVEs) in terms of terrorist financing is growing. DVEs in this category are not the type of person who will fund themselves via overseas channels. They draw on their own personal funds and/or small donations from supporters. The US National Terrorist Financing Risk Assessment (2024) identifies the main funding methods as personal funds, prepaid cards, stored value items, and P2P transfers. Europol's TE-SAT 2025 report also notes that European DVEs tend to use small transactions, which compliance systems find difficult to detect (Europol, 2025).
To counter this form of funding, financial institutions need to watch for odd patterns and behaviours. For example, a customer buying tactical gear, chemicals, or other weapons-related products outside their normal spending pattern may be at risk. Repeated use of prepaid cards and small deposits withdrawn quickly are also red flags. The FATF's 2021 ERMV financing report makes it clear that monitoring ideologically driven behaviour is vital, even in very small transactions (FATF, 2021). The most effective way to identify these cases is to combine financial data with domestic intelligence and share information between the public and private sectors.
FATF Grey and Black Lists in 2025
Beyond how financing is sourced, the risk associated with certain countries remains a major issue in the fight against terrorist financing. The FATF maintains two main public lists, updated regularly: the grey list, which comprises countries under closer scrutiny, and the blocklist, which contains the highest-risk countries in need of urgent action. Countries on the grey list have serious AML/CFT problems but are working with the FATF to address them. Countries on the blocklist have serious weaknesses and are subject to countermeasures that could effectively cut them off from the international financial system (FATF, 2025a).
As of June 2025, the FATF's updated lists show that several countries remain an issue, and the European Commission list means EU financial institutions must operate under more stringent due diligence requirements (European Commission, 2025). This directly affects compliance professionals' day-to-day work. Payment banks and others will have to conduct additional checks on customers and/or partners from countries on the blocked or grey list, update their monitoring systems to detect payments to those countries, and review banking relationships to prevent potential regulatory issues. If they don't keep up with the requirements, they will face fines, reputational damage, and loss of market access.
Strengthening Compliance Frameworks
To respond effectively, you need a strong compliance regime that maps new risk types to the relevant regulations. The compliance function needs to actively assess and revise its internal policies to account for new threat typologies and the shifting regulatory framework. For campaign organisers in particular, there should be a much more rigorous onboarding process, with appropriate identity verification (MFA), background checks, and clear documentation of the campaign's purpose. Ongoing monitoring procedures should include automated alerts and rules to flag anomalies in the donation profile, such as a sudden spike in funds or a donor from an unusual location. Staff should be trained to spot red flags in transaction speed and donor locations and escalate where necessary. For DVEs and lone actors, monitoring systems should have specific rule sets to detect small, unusual patterns of activity, such as a large number of small transactions or purchases of tactical or prohibited items outside the norm. You can enhance monitoring of prepaid and P2P products by blocking certain merchant category codes, imposing transaction limits, and reviewing rapid reloads. To improve detection, hold regular information-sharing sessions with local authorities and attend intelligence briefings to help correlate financial data with police intelligence. You should run a regular programme of system testing and scenario simulations to ensure updates are effective and work in practice.
To manage country risk, incorporate FATF and EU list updates into your risk-scoring system so you can flag high-risk countries immediately. Review your correspondent banking relationships after each update, and ensure your due diligence questionnaires reflect the new designations. Ongoing information sharing is important too. Compliance teams should participate in public/private partnerships, file the appropriate suspicious transaction reports with relevant risk-type information, and maintain a current library of risk types for investigators and analysts. The ideal approach is to attend regular typology briefings with the public sector to discuss the latest threats and trends. You need to have protected channels of communication (encrypted email, secure portal, etc.) to enable the timely and safe exchange of intelligence with the authorities and industry peers. You could also appoint information-sharing officers to coordinate responses to alerts or requests and ensure any sensitive information is transmitted securely. Regular cross-sector meetings and anonymised case studies are good ways to build a shared understanding of the risks and improve overall detection and response capability.
Case Examples
Recent cases illustrate just how difficult it can be to detect terrorist financing. One example was a crowdfunding campaign which initially appeared to be purely humanitarian in nature, only to be found later to have been funding an extremist group. This came to light only by identifying odd donation patterns. The takeaway for compliance teams is to watch for donation spikes, unusual giving patterns, and campaigns with unclear objectives, as these can be early red flags that warrant further investigation. In another case, prepaid cards and private salaries were used to purchase weapons online, and the risk was identified through the combination of financial monitoring and law enforcement intelligence. This clearly shows the need to combine financial data with intelligence from other sources, and it reinforces the need for compliance teams to have robust communication channels with law enforcement to detect and investigate suspicious activity. A third case involved an EU bank that increased its due diligence after the FATF grey-listed its partner country, avoiding both penalties and brand damage. This is a case in point for the value of consistently reviewing and updating your compliance regime and risk ratings in light of FATF and EU list changes, and being ready to re-evaluate your business relationships at the first sign of a change in country risk. These cases highlight practical lessons for compliance professionals: keep a close eye on atypical financial behaviour, maintain regular communication with law enforcement, and be ready to adapt controls quickly in response to changes in country risk.
Conclusion
In 2025, terrorist financing will be characterised by greater decentralisation, the use of internet platforms and the continued risks from certain countries. The trend towards crowdfunding and individual actors indicates a shift to more discreet forms of funding. FATF's grey and blocklists will remain a major factor in how financial institutions assess and manage risk. This creates two key challenges for the compliance professional: detecting small, hidden risks in the normal course of business and keeping up with regulatory changes. The way forward is to remain alert, understand the regulatory environment, and work in partnership with both the public and private sectors to protect the institution and the financial system from the growing threats of terrorist financing.