- Terrorist financing is becoming more complex and hybrid, combining traditional methods (cash, charities, hawala) with digital tools like cryptocurrency and encrypted platforms, making detection more difficult.
- Weak global enforcement and governance gaps—highlighted by inconsistent application of laws and sanctions—limit the effectiveness of efforts to combat illicit financial networks.
- Technology is driving an arms race: while terrorists use crypto and AI to move small but impactful funds quickly across borders, effective countermeasures require stronger international cooperation and coordinated financial oversight.
During the Terrorist Financing session at Homeland Security Today’s 2026 Counterterrorism Summit, moderated by Dr. Mahmut Cengiz, the counterterrorism managing editor at Homeland Security Today, the panelists included Dawson Law, Founder, Conseil Global Advisors; Ari Redbord, former Representative to the United Kingdom, U.S. Department of the Treasury; and a former Senior Advisor to the Deputy Secretary and Undersecretary for Terrorism and Financial Intelligence. The panelists discussed today’s counterterrorism landscape. It is important to note that military action and national laws are insufficient, and preventing terrorism requires countries to improve these complex and challenging elements. This includes tracking financial networks, strengthening institutional capacity at the international level, keeping pace with evolving technology, and aligning efforts across borders and among countries.
Terrorist financing is evolving, becoming more complex, global, and increasingly difficult to detect over time. Three key themes were discussed in Terrorism 2026. First, terrorist financing is becoming more complex and digital; the flow of money has changed over time. Now, financing is not only about cash and bank transfers, but money moves across networks. Groups use a mix of traditional methods, such as cash, taxation, charities, and hawala, as well as modern methods, such as cryptocurrency, encrypted apps, messaging apps, and online fundraising. As groups blend these two methods, it makes it harder for investigators to trace terrorist financing than before, when money moved across many channels at once.
Second, there are gaps in global enforcement. According to the Financial Action Task Force (FATF) 2025 report, 69% of countries struggle to enforce rules because many lack strong laws, and corruption and weak governance create structural vulnerabilities. Legal tools and sanctions are applied inconsistently, even where they are widely used. Even when rules exist, inconsistent application and weak enforcement reveal major structural deficiencies in the investigation of illicit finance. Lastly, technology and international cooperation are changing the nature of crime and its prevention. One key focus was the dual role of technology and global networks. Modern tools fuel a technological arms race between criminals and investigators. Criminals use AI, crypto assets, and encrypted networks to move money quickly, conceal unlawful activity, and bypass sanctions. Investigators, in turn, use them to trace transactions and analyze patterns.
How does terrorist financing work at the global level? It does not operate in isolation. Multiple groups are linked to the illegal flow of money. For instance, Iran has supported Hamas and Hezbollah through modern tools like cryptocurrency to bypass sanctions. In addition, Zakat and charity funding add another layer of complexity, as Hamas has used traditional methods to fund its operations and governance.
Following this, one major takeaway is that crypto is a small part of terrorist financing, but it is important and has attracted significant attention because it enables faster, borderless transfers. Cryptocurrency is used for fundraising, allowing people to raise money quickly from people around the world outside the banking system. Moreover, cryptocurrency is an effective way to send money across borders, which challenges authorities to track it. The panel underscored that small amounts of money have a big impact. Unlike other financial crimes, small amounts matter because terrorist acts cost a lot of money. For example, a small amount of crypto ($5000-$10000) is enough to plan and carry out a terrorist attack. This makes detection harder because large transactions may look significant, and it creates a less visible financial footprint.
A critical emerging trend is the expansion of sanctions and legal strategies. The U.S. is imposing more sanctions, blocking individuals and groups from the formal financial network. In addition, the U.S. has begun labeling the cartel as a terrorist organization. This expands the legal authority’s power to act against them. This brings some changes, as there is a greater risk for companies if they accidentally engage with terrorist groups. Second, it increases the risk of a massive lawsuit if the rules are violated. Third, the government has broader enforcement power to investigate and implement financial restrictions. Legal strategies and sanctions reflect a major shift toward a stronger, stricter security-based approach to prevent terrorist financing, but it also makes the process more complex and increases legal risks.
Terrorist financing has become more complex and harder to detect. Terrorist groups use a blend of methods, most countries are struggling to enforce rules, and technology is fueling an arms race. State actors, global networks, and interconnected global crimes are linked to how terrorist financing functions at the global level. Terrorist financing is an important issue in 2026 because it affects the practical aspects of governance, security, and global stability. Preventing terrorist acts depends on national law, but global cooperation across countries is needed to see how counterterrorism in 2026 is tracking the complexity of terrorist financing, keeping pace with rapid technological change, and collaborating across industries to keep up with the evolving threats. Preventing terrorism requires putting different pieces together at the global level of governance and the financial system to effectively fight terrorist financing.
