Terrorist financing
TFAlso called financing of terrorism, CFT
Terrorist financing is providing or collecting money or other assets knowing or intending that they will be used for terrorism, by a terrorist or by a terrorist organisation. The funds can come from legitimate sources such as salaries, donations or business income. The offence is the use, not the origin, of the money.
How it works
Firms counter terrorist financing with the same framework used for money laundering. They screen customers and payments against terrorist designations, apply due diligence to charities and money service businesses, and monitor for typologies such as small transfers to conflict zones, crowdfunding and use of cryptoassets. Suspicions go to the financial intelligence unit, and designated persons' assets are frozen under sanctions law.
Terrorist financing matters because amounts are often small and the money is clean at source, so value thresholds and laundering indicators miss it. Detection relies on intelligence, sanctions lists and links between customers. Many regimes, including the UK, make failure to report terrorist financing suspicion in the regulated sector a criminal offence.
The rules
Requires states to criminalise providing or collecting funds with intent or knowledge that they will be used for terrorist acts.
States party to the conventionRequires countries to criminalise financing of terrorist acts, terrorist organisations and individual terrorists, even without a link to a specific attack.
FATF member and assessed jurisdictionsCreates fundraising, use, possession and arrangement offences, and makes failure to disclose suspicion in the regulated sector an offence.
All persons in the UK, with section 21A covering the regulated sectorMakes it a federal crime to provide or collect funds intending or knowing they will be used for acts of terrorism.
All persons subject to US jurisdictionCommon questions
How is terrorist financing different from money laundering?
Money laundering hides the criminal origin of funds. Terrorist financing concerns the destination and purpose of funds, which may be clean at source. Many controls overlap, so laws and firms usually treat them together as AML/CFT.
What are common terrorist financing red flags?
Indicators include transfers to or from high-risk conflict areas, links to designated persons, unexplained charity flows, crowdfunding with vague purposes, structured cash withdrawals near travel and use of cryptoassets with privacy features.
Is there an amount threshold for terrorist financing?
No. Terrorist financing laws apply to any amount. Attacks have been funded with small sums, so firms cannot rely on value thresholds alone to detect this activity.
