MAT SAYS:  comprehensive update on the FATF Terrorist Financing Typologies Report and its latest evolution

MAT SAYS:  comprehensive update on the FATF Terrorist Financing Typologies Report and its latest evolution:

What the FATF Report Covers

The Financial Action Task Force (FATF) publishes periodic typology reports and updates on terrorist financing (TF).

• https://www.fatf-gafi.org/en/publications/Methodsandtrends/comprehensive-update-terrorist-financing-risks-2025.html

The 2025 Comprehensive Update on Terrorist Financing Risks is the most extensive global assessment in a decade. It examines:

• How terrorists raise funds:
• Cash remains dominant but increasingly fragmented into micro-transactions to avoid detection.
• Exploitation of natural resources (oil, minerals, timber) in weak governance zones.
• Abuse of non-profit organisations (NPOs) and humanitarian channels.
• Criminal convergence: links with drug trafficking, human smuggling, and extortion.
• How funds are moved and stored:
• Hawala and informal value transfer systems remain resilient.
• Use of formal banking channels, prepaid cards, and money service businesses.
• Digital platforms (social media, crowdfunding) for solicitation and propaganda.
• Virtual assets and blockchain for pseudo-anonymous transfers.
• Hybrid models combining cash, crypto, and trade-based laundering. [verafin.com], [fiaumalta.org], [sfm.com]
• Adaptability and opportunism:
• Terrorist groups exploit both traditional and emerging financial technologies, creating multi-layered financing channels that are harder to trace.
• FATF warns that typologies are evolving faster than regulatory responses. [fatf-gafi.org], [sfm.com]

Does It Properly Evaluate Evolution for Smarter CT?

Strengths of the Report:

• Granular analysis: Includes case studies spanning 10+ years and contributions from 80+ jurisdictions, the private sector, academia, and think tanks.
• Risk-based approach: Emphasises proportionality and context-specific measures rather than blanket restrictions.
• Integration of digital risks: Addresses virtual assets, decentralised finance, and online platforms in detail.
• Cross-sector convergence: Highlights links between terrorism financing and organised crime, corruption, and professional enablers. [un.org], [gnet-research.org]

Limitations:

• Indicators vs. actionable typologies: The report provides 150 risk indicators, but many resemble generic AML red flags and fall short of offering predictive typologies for proactive detection.
• Effectiveness gap: FATF mutual evaluations show only 30% of countries rated positively for investigations (IO9) and 15% for prevention (IO10), meaning practical implementation lags behind analytical insight. [thefinanci…menews.com]
• Private sector challenges: Detecting TF remains extremely difficult without named persons or high-risk jurisdictions; FATF acknowledges this gap persists despite guidance. [thefinanci…menews.com]

Key Recommendations for a Smarter, Nuanced Approach

1. Enhance Financial Intelligence Fusion: Combine financial data with counter-terrorism intelligence for holistic threat mapping.
2. Strengthen Virtual Asset Oversight: Implement blockchain analytics and licensing for VASPs (Virtual Asset Service Providers).
3. Public–Private Partnerships: Expand information-sharing frameworks beyond banks to fintechs, crowdfunding platforms, and humanitarian actors.
4. Contextual Risk-Based Controls: Avoid blanket de-risking; apply proportionate measures to preserve financial inclusion while mitigating TF risk.
5. Capacity Building for Smaller Jurisdictions: Technical assistance and shared analytics to close structural gaps in detection and prosecution. [finreg-e.com], [anti-money…ndering.eu]

Bottom Line

The FATF report does evaluate the evolution of terrorist financing comprehensively, but translating this into smarter CT (Counter-Terrorism) strategies requires:

• Moving from descriptive indicators to predictive analytics.
• Embedding technology-driven detection (AI, blockchain monitoring).
• Balancing security with financial inclusion to avoid pushing transactions underground.

Source

https://www.fatf-gafi.org/en/publications/Methodsandtrends/comprehensive-update-terrorist-financing-risks-2025.html