Terrorist Financing Detection – Nasdaq Verafin

As someone who has spent more than a decade immersed in the evolving world of financial crime detection, I’ve learned that terrorist financing remains one of the most complex, elusive and consequential threats we face. In my role leading AML product strategy at Nasdaq Verafin, I’ve worked closely with colleagues, customers and global experts to understand how these nefarious networks operate — and how we can better detect and disrupt them. Our recent webinar, featuring the insights of seasoned threat finance expert Dr. Jessica Davis of Insight Threat Intelligence and our own AML specialist Rini Joseph, brought these challenges into sharp focus. 

Terrorist financing is not only a compliance issue — it is a public safety issue. The funds flowing through global financial systems allow threatening organizations to recruit, radicalize, procure weapons and carry out attacks. According to Nasdaq’s 2024 Global Financial Crime Report, an estimated $11.5 billion in terror‑related funds moved through the global financial system in 2023 alone. And yet, we know these figures are likely underreported. Much of this activity remains hidden, undetected by traditional approaches that are not designed to uncover this typology. 

In this blog, I want to unpack the key themes from the webinar and share actionable insights for AML professionals who are striving to stay ahead of this threat. 

Why is Terrorist Financing so Difficult to Detect?

One of the most important points raised by Dr. Davis is that terrorist financing is, fundamentally, a small data problem. While the volumes associated with money laundering or fraud tend to create identifiable patterns, terrorist financing often involves: 

• Small-dollar, everyday transactions

• Below-threshold transfers, often as little as $2,000–$3,000

• Highly localized, jurisdiction-specific behaviors

• Sophisticated actors who understand AML controls

Operational terrorist activity — funding a specific attack — rarely resembles the kind of transactional red flags most legacy systems are tuned to detect. These flows are subtle, sporadic and deeply contextual. 

Compounding this challenge is the reality that many compliance officers carry the weight of ensuring they do not “wave through” a transaction later linked to terrorism. This sense of responsibility underscores why clear, actionable guidance and more effective tools are essential. 

Methods of Raising and Moving Funds for Terrorist Financing

The data shows us that terrorist financing trends are surprisingly consistent year over year when it comes to raising money. Two methods remain especially prevalent: 

1. Charities and Nonprofit Organizations (NPOs)

NPOs are frequently misused — sometimes knowingly, often unknowingly — to store, move and obscure funds. While legitimate nonprofits play critical humanitarian roles, they also present vulnerabilities that terrorist networks exploit. 

2. Identity-Based Support Networks

Individuals sympathetic to extremist ideologies continue to provide consistent financial support. These networks are decentralized, resilient and difficult to identify without behavioral context. 

What has changed significantly, however, is how the money is moved once it has been raised. 

Cryptocurrency: How Terrorists Move Money

Over the past several years, cryptocurrency has transformed the terrorist financing landscape. Early experimentation has matured into a large-scale, well-organized system. 

Research from Insight Threat Intelligence highlights that stablecoins have become popular due to price stability and ease of cross-border transfer. Other conveniences that have become attractive to terrorist groups include: 

• Over-the-counter brokers

• Hawala networks now supporting crypto

• Low or no-KYC offshore exchanges

Combined, these factors create an ecosystem uniquely suited for obfuscation. 

One of the most striking examples discussed in the webinar is a “shadow” crypto finance system, used to fund a network of proxy terrorist organizations. This ecosystem is robust, sophisticated and largely insulated from sanctions because it often bypasses traditional financial rails entirely. 

Moving Beyond Legacy Systems: Targeted Analytics

Traditional rule-based monitoring systems fall short because they detect anomalies out of context. Terrorist financing detection requires the opposite: a nuanced, typology-driven understanding of how legitimate behavior can mask illicit intent. 

At Nasdaq Verafin, our approach has been to develop targeted analytics, engineered specifically for complex predicate crimes like terrorist financing. 

Instead of focusing on one-off anomalies, we identify converging red flags, such as: 

• Suspicious NPO activity

• High-risk jurisdictional transfers

• Crowdfunding linked to conflict zones

• Crypto interaction patterns

• Layering through multiple NPOs

• Disproportionate transfer activity from new customers

The Power of Consortium Data in Detecting Terrorist Financing

A recurring theme in our research and customer feedback is the opacity of counterparties. Banks know their customers — but they do not know who their customers’ partners, payees or counterparties really are. 

This is where consortium data becomes transformational. 

Across our network of more than 2,700 financial institutions, we can identify risk insights —without sharing PII — revealing whether counterparties are: 

• Known suspicious entities

Shell companies are especially relevant. While not inherently illicit, shells often exhibit telltale behaviors: lack of physical presence, no payroll, tax haven interaction or inconsistent activity. 

Terrorist Financing Detection: Innovate to Stay Ahead

Terrorist financing is a small-signal problem hidden within massive volumes of legitimate financial activity. Improving detection requires combining targeted analytics, consortium intelligence, crypto-awareness, efficient workflows and continuous education. By embracing innovation and striving to stay informed about the evolution of this typology, financial institutions can remain at the forefront of preventing terrorist groups from carrying out their destructive activities.  

For deeper insights from our experts, watch the full webinar – Terrorist Financing Detection: Tools, Tactics and Real-World Solutions. 

About the Author:

FOUAD HASSOUNEH
VP – Product Management, Nasdaq Verafin

Since joining Nasdaq Verafin in 2013, Fouad has excelled in a wide range of roles. In his current role as VP – Product Management, Fouad is responsible for defining the product vision, strategy, and roadmap. He helps Nasdaq Verafin deliver solutions that leverage artificial intelligence to effectively detect money laundering, while helping institutions maintain compliance. Working in close collaboration with Nasdaq Verafin colleagues, customers and senior stakeholders, Fouad applies his extensive knowledge of the AML/CFT and fraud landscapes to guide innovations and enhancements to product management and analytics. Fouad is passionate about creating value for customers and society by combating financial crime with cutting-edge technology.