KYC AML Guide: the Clock shows the average reeding time of the blog05 min Read


KYC AML Guide: the Clock shows the average reeding time of the blogJune 16, 2023

Common Ways of Terrorism Financing in Europe- Europol Insights

Europol has released European Union Terrorism Situation and Trend Report 2023, giving interesting insights into the state of terrorism and means of its facilitation, across European Union. The publication while broadly giving an overview of Terrorism in Europe for the year 2022, specifically highlights the terrorist activities of different groups with a focus on Jihadists, Left-wing groups, anarchists, ethno-nationalists, and other kinds of extremists. As per the key findings, 28 total attacks were reported in 2022 as compared to 18 in 2021. Most attacks were from left-wing and anarchist groups followed by Jihadists and right-wing terrorists. Law enforcement authorities around Europe arrested 380 individuals with most of the arrests relating to Jihadist outfits.

Belal Mahmoud

KYC Product Consultant

Along with valuable insights into propagation and communication strategies among each group, the Europol report also reveals how these organizations finance their activities. Here is an overview of what could be popular but unconventional and difficult-to-detect means of funding for extremists.

Different Ways of Terrorism Financing in Europe

It appears that screening for terrorism financing in Europe may prove a bit daunting task. The reason is that extremist factions are apparently either bypassing traditional financial institutions or using legitimate businesses and transactions to raise funds. Some of these means may include selling concerts and events tickets and selling merchandise on e-commerce platforms.  The terrorists also use gaming platforms and encrypted messaging applications for the propagation of their ideas and radicalization of the masses.

Use of Virtual Assets for Financing Terrorist Activities

As per the report, advanced financial technologies are gaining popularity among users for the financing of terrorism. Cryptocurrencies and other forms of virtual assets are used because of the inherent feature of anonymity associated with these transactions.

Use of Legal Business Structure

The use of legal business operations to finance terrorist operations is very common across the spectrum of terrorist outfits whether from right-wing or left-wing. Europol report presents the case of a terrorist suspect who likely used a network of companies in different countries to raise funds for the Islamic State. Apart from using off-shore companies with a presence in different jurisdictions organizations even use some other legitimate businesses like coffee houses, bars, kiosks, etc. to finance their extremist motives.

Use of Criminal Activities

Crimes like drug trafficking, human smuggling, robbery, theft, identity theft, tax fraud, illegal use of public funds, social-benefits fraud, and other economic fraud are also very often used by terrorists to get financial support for their operations.

Raising Funds Through Social Media and E-Commerce

What seems to be an unusual means of financing is the sale of merchandise through social media, e-commerce, and video gaming platforms. The very reason that such transactions are often in small amounts, makes it difficult for the reporting authorities to detect and screen for any wrongdoing. Funding through crowdfunding campaigns and membership fees raised through cloud-based applications is also used by terrorist organizations to collect money for their illicit activities,

Donations and Humanitarian Aid

Donations and humanitarian aid collected through community events and concerts are also one of the means of terrorism financing in Europe among the different extremist groups. Screening funds from these events to check whether they are actually authentic or not also requires a great deal of vigilance because any false flag can jeopardize the funding for some right cause as well.

Layering of Funds

As Anti-Money laundering laws in Europe are gaining a stronghold, extremists are using more sophisticated means of layering. For example, exchanging crypto-currencies with fiat in another jurisdiction, sending this money through hawala, and then using money transfer businesses and money mules to send the funds to the final beneficiary making it really complex for law enforcement to track down the initial beneficiary,

What Is the Challenge?

A look at popular means of terrorism financing in Europe reveals that individual risk profiling might be more important than business risk profiling since businesses very often seem legitimate. Here, again knowing your customer seems more necessary than knowing your business for financial institutions when it comes to tracking down terrorist financing by individuals who are not big enough to get under the radar of law enforcement.

Also Read: AML Watchlist Screening: Latest Developments & Insights


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Belal Mahmoud
KYC AML Guide: the Linkedin share

Belal possess over 8 years experience in the KYC Identity Verification industry. He has consulted KYC solutions for over 20 new economy companies at DIFC and ADGM while ensuring a seamless technical integration and helped in jurisdictional compliance audits.