The Financial Action Task Force (FATF) has recently published an updated report that highlights the evolving risks associated with terrorist financing. The organization warns about gaps in countries’ ability to comprehend these trends and respond appropriately.

FATF’s Report on Terrorist Financing Risks

This comprehensive update underscores terrorists’ persistent exploitation of the international financial system to facilitate their operations and attacks. Considering various methods of TF based on different factors and contexts, the report stresses the need for adaptable counter-terrorist financing (CFT) measures.

The report also includes case studies spanning over a decade to provide a thorough understanding of the factors influencing terrorist financing risks. This compilation involves contributions from more than 80 jurisdictions across the FATF Global Network, research findings, and over 840 submissions from the private sector, academia, and think tanks.

FATF’s Findings

Despite many jurisdictions taking steps to address terrorist financing, nearly three-quarters of those assessed by the FATF and the Global Network exhibited significant or structural issues in investigating, prosecuting, and convicting TF cases. The report suggests that both public and private sectors need to enhance technical compliance to prevent terrorism financiers from exploiting these vulnerabilities.

According to submissions from across the FATF Global network, the report identifies key trends in terrorist financing over the last decade, including:

• A significant increase in using diverse methods of financing and integrating digital technologies with conventional techniques, adding more complexity to TF activities;
• Decentralized operations involving regional financial hubs and self-financed cells that adapt to local contexts and leverage a wider range of funding sources;
• An expansion of the threat posed by lone individuals, often younger, who utilize microfinancing strategies from legitimate sources and petty crimes, along with technology-supported methods such as gaming and social media features;
• Challenges in tracing financial trails for ethnically, racially, or politically motivated terrorist attacks;
• The convergence of terrorist financing schemes with organized crime.

FATF’s Key Recommendations

To aid countries in addressing these issues, the report highlights crucial measures to improve the Global Network’s efforts in understanding and responding to terrorist financing. These include strengthening international cooperation and fostering targeted public-private relationships. Additionally, it provides practical indicators for competent authorities, the private sector, and other stakeholders to detect and mitigate TF, such as patterns in payments, travel activities, and social media activity.