GEORGE TOWN, Cayman Islands – In July 2025, the Financial Action Task Force (“FATF”) published a new report highlighting the evolving terrorist financing (“TF”) risks. The report outlines various factors that influence TF risks, the methods used to finance terrorism, and anticipated trends.
Highlights
TF operations are increasingly decentralised relying more on regional hubs, self-financed cells and mixed funding streams such as criminal proceeds and legitimate business activities.
Terrorist organisations and individuals are applying hybrid financing methods; combining traditional methods – like cash couriering, hawala, and shell entities – with digital technologies, using social media, crowdfunding, gaming platforms, and cryptocurrencies.
Humanitarian aid channels and non-profit organisations (“NPO”) remain vulnerable to abuse. However, risk-based safeguards are needed to protect legitimate aid and NPO activity.
Expectations for FSPs
Financial service providers (“FSPs”) should understand the nature and level of the risks that they are exposed to and ensure that systems and processes are in place to identify, assess, monitor, manage and mitigate TF risks.
FSPs are encouraged to review the report, including the non-exhaustive list of TF risk indicators, which can help bolster the detection, disruption, and reporting of suspicious activity.
TF Risk Indicators
Customer behaviour
- Recognisable radicalisation or change of character through a change in lifestyle, online presence and/ or behaviour.
- Customers who are inquisitive about transaction thresholds and how an institution processes transaction to and from a high-risk jurisdiction.
- Young individuals (between the ages of 17-26 years) open accounts and withdraw or transfer funds shortly afterwards.
- Recurrent use of the same address, phone number across multiple unrelated accounts.
Customer economic profile and transactions
- Disposing of meaningful personal assets or belongings in an unusual manner, particularly with urgency or without regard for personal financial gain.
- Structured transactions to avoid reporting thresholds.
- Transactions involving multiple customers remitting funds to the same beneficiary or multiple beneficiaries in high-risk jurisdictions.
- Customer remitting funds to multiple beneficiaries in a higher-risk jurisdiction.
- Large number of wire transfers made by a person in small amounts in an apparent effort to avoid identification requirements.
- Transactions to or from entities or individuals in multiple countries without an apparent purpose.
- Use of anonymity-enhancing electronic money or VAs, particularly when converted into legal tender.
- Frequent foreign currency cash deposits which are below the threshold, followed by immediate withdrawal in a foreign jurisdiction.
Financial activity in high-risk jurisdictions
- Customer making online payments for services or ATM use in high-risk jurisdictions or close to areas with active terrorism threats, or in areas bordering conflict zone.
- Frequent travel to high-risk jurisdictions.
- Customers’ IP addresses are not consistent with the expected location data of the entity.
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