SRINAGAR: A critical new report from the Financial Action Task Force (FATF), Comprehensive Update on Terrorist Financing Risks July 2025, has brought to light the evolving methods terrorist organisations employ to fund their operations, including the stark revelation of how e-commerce platforms were exploited for a deadly attack in India. The report underscores the persistent challenges in combating these financial lifelines, noting that a significant 69% of assessed jurisdictions still exhibit deficiencies in investigating and prosecuting terrorism financing cases.
The document provides a chilling case study on page 73, detailing the “Use of e-commerce platform in the procurement of materials for a terrorist attack in India”. It states: “In February 2019, a suicide bombing targeted a convoy of Indian Security forces, resulting in the deaths of forty soldiers. India’s authorities concluded that the attack was orchestrated by Jaish-I-Mohammed (JiM). Investigations revealed the cross-border movement of a large quantity of explosives into India. Notably, a key component of the improvised explosive device used in the attack— aluminum powder—was procured through the EPOM Amazon. This material was used to enhance the impact of the blast. As a result of the investigation, 19 individuals were charged under relevant provisions of the Unlawful Activities (Prevention) Act, including sections related to TF. Among those charged were seven foreign nationals, including the suicide bomber. LEAs also recovered moveable and immovable assets connected to the attack, such as vehicles and terrorist hideouts.” This case starkly illustrates the dangerous adaptability of terror groups in leveraging modern commercial avenues.
Beyond this specific incident, the FATF report meticulously outlines the myriad factors influencing terrorist financing risks globally. “Materiality factors,” such as territorial control, proximity to armed conflicts, access to natural resources, and pervasive weak governance and corruption, create fertile ground for illicit financial activities. Terrorist organisations, the report states, “exploit these conditions to generate revenue,” often through extortion in resource-rich sectors or by looting cultural heritage. It also acknowledges reports of some groups receiving “financial support from state governments.” The nature of the terrorist actor also dictates their financial tactics; large networked organisations often leverage “decentralised regional hubs for complex cross-border financial networks,” while individual terrorists or small cells, including foreign terrorist fighters, typically operate on “minimal financial needs,” often relying on microfinancing from seemingly licit sources.
The methods employed for terrorist financing are as diverse as they are adaptable. Traditional informal mechanisms like “cash transportation and hawala and other similar service providers (HOSSPs) remain widely used,” particularly in volatile regions where they offer anonymity. However, a significant shift towards digital avenues is evident. The report observes a “growing popularity of online payment services and mobile money platforms,” especially where regulations are lax. More sophisticated groups are even adopting “blockchain-based pseudo-anonymous transfers,” marking a digital evolution of traditional hawala. Digital platforms such as social media and crowdfunding sites are increasingly “abused for TF, particularly when they offer integrated payment services that bypass due diligence.” The use of virtual assets (VAs) by terrorists is also on the rise, with groups systematically employing “obfuscation techniques and/or shifting towards alternatives VAs promoted as more private and secure.” For instance, ISIL-K has reportedly received funds in Bitcoin, Ethereum, and TRX in response to propaganda and recruitment efforts.
Beyond digital means, terrorist organisations continue to exploit natural resources through “trading and trafficking” and engage in various criminal activities including “extortion, kidnapping for ransom, human trafficking,” and the illicit trade of drugs and arms. The abuse of legal entities, including “shell companies, trusts, and NPOs,” further complicates detection, as these are used for transferring funds and supporting operations.
Looking ahead, the report warns of a significant increase in the “interlinkage of diverse methods and the integration of digital technologies with conventional techniques,” leading to new layers of complexity. Operations are becoming “increasingly decentralised,” with a rise in self-financed cells. The threat from lone individuals, often younger, is growing, employing “microfinancing strategies that are particularly difficult to detect” due to their inconspicuous financial footprints. Geographically, the report notes that “sub-Saharan Africa—particularly the Sahel—has emerged as the global epicentre of terrorism.”
To counter these evolving threats, the FATF outlines several crucial recommendations. It calls for “coordinated, multilateral responses” to address the transnational dimension of terrorist financing, including prioritising multilateral designations under UNSC sanctions. Strengthening the effective implementation of “FATF Standards” is deemed essential, particularly in high-risk sectors like money value transfer services and virtual asset service providers, to harmonise legal frameworks. Furthermore, the report stresses the importance of “expanding outreach to uncovered sectors” such as social media platforms, potentially through public-private partnerships. It also advocates for integrating Counter-Terrorist Financing (CFT) into broader technical assistance initiatives and enhancing FATF’s support for private sector CFT efforts through centralized resources and targeted communication. Critically, the FATF stresses that CFT measures must “safeguard humanitarian activity,” ensuring they do not impede the vital work of impartial humanitarian actors.
The report concludes with a call for continuous strengthening of risk analysis through regular and updated assessments, acknowledging that new terrorist financing schemes will undoubtedly continue to emerge.
