Abstract:
The increasing speed with which digital technologies such as the internet, artificial intelligence, encrypted communications and digital currencies have changed the way we communicate, govern and are secure have greatly impacted how terrorist organizations operate financially and the development of complex issues pertaining to doctrine under anti-terrorism laws. This paper establishes an expansive framework to help us analyse how terrorist organizations finance themselves with a dual focus on doctrinal and empirical methods. In the follow-up to the introduction, cyberspace is positioned as the new arena for terrorism; the legal nature of cyberspace and the jurisdictional difficulties associated with it are discussed; as well as the constitutional limitations that exist under the law in India and other nations through comparative study. Next we analyse new ways to finance terrorism digitally, including via peer-to-peer (P2P) platforms, based upon what the Financial Action Task Force has already established, the obligations imposed by the United Nations Security Council (UNSC), and the enforcement of cases in India. We will then compare India, the UK and the US with respect to the laws establishing the legal framework related to counter-terrorism financing, paying particular attention to the tension that exists between preventive action and the fundamental rights of the population. Crowd funding has emerged as a cross-border risk vector and as demonstrated through factual examples regarding Hamas and Islamic State of Iraq and Syria (ISIS). Finally, the conclusion of this paper synthesises the findings and provides recommendations to assist governments in creating a stronger counter-terrorism finance framework while maintaining proportionality and human rights protections.
Introduction
With the emergence of artificial intelligence, the entire global structure has transformed. In the 21st-century security and intelligence have raised novel challenges for factors such as liability, evidence, and criminalization under frameworks like India’s UAPA (Unlawful Activities Prevention Act,1967). A case was before the Supreme Court in Kartar Singh v. State of Punjab (1994)[1] addressed a case arising out of the UAPA’s constitutionality and found that while the existence of terrorism as a threat to public safety warranted the need for extraordinary legal measures, there must be some limitations on those measures through judicial scrutiny and procedural safeguards to preserve and protect constitutional protections.
Similarly, the Terrorism Act (2000)[2] of England and the framework under 18 U.S.C. §§ 2339A–2339B, in the U.S. and as upheld by the U.S. The Supreme Court, in Holder v.Hall, Humanitarian Law Project (2010)[3], adopted a similar preventative approach. While the U.S. Holder decision and Indian law both confer broad legislative powers upon governments to criminalize giving aid to terrorists, the stratified and anonymized Internet (e.g., the Dark Web, cryptocurrencies) allows such organizations to evade detection and finance their activities. These acts violate India’s Prevention of Money Laundering Act, 2002 (PMLA)[4], the laws of UK known as Proceeds of Crime Act, 2002 (UK)[5], and the Bank Secrecy Act of the US[6]. Doctrinally, tracing the digital assets associated with these types of activities, establishing the financial intent behind those activities, and obtaining evidence beyond a reasonable doubt is an example of a challenge to traditional evidentiary standard requirements. The Supreme Court, via the case of Arup Bhuyan v. State of Assam (2011)[7], has taken a clear position that mere association or ideological sympathy with a terrorist group is insufficient to establish liability for criminal acts.
The application of encrypted software to generate material for extremist ideology and assistance in the mobilization of extremist ideology and groups is creating new and serious issues regarding the Constitution and Human Rights of individuals. Article 19(2) of the Constitution, which allows for restrictions on speech, requires those restrictions to fulfil the requirement of ‘reasonableness’. The case of PUCL v. Union of India (1997)[8], determined that national security or emergency situations do not provide the government with the authority to conduct unauthorized surveillance or interception of its citizens without proper adherence to procedural safeguards, otherwise known as the ‘Rule of Law’. The above statements are magnified in the case of monitoring the Dark Web, as there is an increasing number of law enforcement agencies gathering enormous surveillance powers through which the enforcement or maintenance of civil liberties will be eroded. Comparative jurisprudence in many countries, including but not limited to the United Kingdom and the United States, has held similar views regarding the need for balance between law enforcement needs, that is, National Security, and the need for protection of civil liberties. For example, in A v. Secretary of State for the Home Department (2004)[9], the UK’s provisions for a defensive approach to counter-terrorism were upheld while also adhering to the ‘Principle of Proportionality’ and ‘Non-Discrimination’ under Article 14; and in Holder (U.S.), First Amendment protection was held where the speech incited terrorism. In the latest Supreme Court judgement by Justice K.S. Puttaswamy (Retd.) v. Union of India (2017)[10] The Apex court acknowledged the fact that digital monitoring and anonymity have legal implications based on constitutional rights related to privacy, addressed in Articles 14,19 and 21. The Constitution’s framework in the case of Puttaswamy specifies that any interference with a person’s informational privacy by the state is only permissible when such action is legal, required, and reasonable. Thus, the idea is to protect individual rights.
The role of international obligations in global law has a large impact on the way in which India has shaped various laws especially in the measures to be taken with respect to the anti-terrorist activities. The counter-terrorism legal framework itself is also informed by the international obligations contained in United Nations Security Council Resolutions 1373[11] and 2396[12], which set forth obligations that all states must take action to create the necessary criminal offences and impose criminal penalties against anyone who finances a terrorist organization, establish measures to combat online radicalization, and work together in the international community. The international obligations contained within Resolutions 1373 and 2396 also reflect the transatlantic approaches of the United States and United Kingdom with respect to counter-terrorism, founded on principles of preventative policing, intelligence sharing, particularly regarding financing, and enhanced international co-operation; however, they have been developed through extensive jurisprudential scrutiny.
Cyberspace as a Theatre of Terrorism: Legal Character, Constitutional Limits, and Enforcement Challenges
The Internet is an inter-connected, and at times, layered environment containing multiple tiers of domestic, transnational, and international legal regimes. The Dark Web is one such area that operates under this framework. The Dark Web can only be accessed using specific anonymizing software, such as The Onion Router (Tor), which allows users to ‘mask’ their identities and locations using encrypted routing technology. However, in recent years, the Dark Web has grown in importance with respect to the application of international counter-terrorism law. Following the passage of United Nations Security Council’s Resolution 1373 (2001), states have been bound by a legal obligation to prevent and suppress the financing of terrorist acts, which includes the establishment of legal prohibitions against providing financial assistance to terrorists, freezing assets linked to terrorism, and increased co-operation among countries on a global scale to combat terrorist financing.
The current Security Council has made a number of advances in addressing how terrorists are funded through technology as part of the adoption of Resolution 2462[13] in 2019. Accordingly, Resolution 2462 confirms that any account created by a State with regard to terrorist financing will cover all types of funds, although such funding cannot be tied to a specific type of financial service for the funding to be defined by the State. Under Resolution 2462, the counter-terrorism measures outlined include adherence to International Human Rights Laws, International Humanitarian Law, and International Refugee Law. As a result, Resolution 2617 (2021)[14] reiterates these concerns. Additionally, the work of the Financial Action Task Force (FATF) has aided in establishing the expectations of the international community regarding the use of technology in connection with Terrorist Financing activities. Since the establishing of the FATF in 1989, the FATF plenary outcomes and interpretative guidance have identified terrorist financing as a specified risk that requires a Risk-Based Approach (RBA) for regulators, with a particular focus on virtual assets, non-profit organizations, and crowd funding platforms. FATF recommendations 5[15], 8[16], and 15[17] outline that it is important for states to ensure that effective regulation of terrorist financing is implemented without compromising charitable activity or infringing on Fundamental Rights. These comments were echoed in the most recent FATF[18] plenary outcomes, which provided advice to regulators regarding the risk that groups of individuals may present. The FATF has consistently expressed concern regarding the risk of ‘Over-Implementation’ of LCD reports and regulations as creating barriers to civil society engagement and financial inclusion, and such language has been included in their recommendations to the judicial review process of counter-terrorism measures. In the international normative framework, the Dark Web presents unique challenges for effective regulation. The anonymous structure of the Dark Web, when combined with decentralized Crypto currencies and Escrow payment systems, creates an environment that has facilitated the transatlantic crime of Trafficking in Stolen Financial Data, Forged Documents, Child Sexual Exploitation Material, and Financing of Acts of Political Violence. Therefore, while the Dark Web is not strictly a space free of criminal activity, it also confirms that the Dark Web is also a legal grey area and is not a space with a defined criminal purpose. Terrorist organizations have modified their recruitment and radicalization plans because of the changing environment. The use of encrypted messaging applications, private online forums, and repositories on the Dark Web has been documented by international monitoring organizations and academic research as methods used by the Islamic State of Iraq and Syria (ISIS) to spread propaganda, radicalize individuals, raise funds, and connect with others across borders through the use of their unique messaging methods. The reasons set out by the Court in the case of Arup Bhuyan v State of Assam (2011), where the Court stated that simply being sympathetic to or associated with a particular organization does not establish the basis for a person being charged with a crime; for an individual to be criminally liable for crimes committed by others, they must incite violence or engage in overt acts of criminality. The definition and regulation of terrorism and exploitation on the dark web create an international problem of legal order because of their intersection with various binding UN Security Council Resolutions, International Financial Action Task Force (FATF)[19] regulatory requirements, and domestic constitutional protections.
Radicalization of Lone Wolves and Digital Terror Financing
The emergence of a new breed of terrorist crimes is being driven primarily by lone actors who have been radicalized via the Internet. The Financial Action Task Force (FATF) is an international body that establishes AML and CTF standards and has said that lone actors are now utilizing digital-based payment systems to finance their criminal activities. In its 2025 Comprehensive Update on Terrorist Financing Risk, the FATF highlighted an incident where a person influenced by ISIL used online payment services and encrypted technology to aid in financing the April 3, 2022, Gorakhnath Temple Attack in Uttar Pradesh, India. The defendant transferred approximately ₹6.69 lakh (approximately US$7,685) through at least 44 different international transactions between third-party accounts on PayPal and received funds from outside India; the defendant also used a VPN service to mask both his IP address and online activity. The Inquiry was conducted by UP ATS. Accordingly, prosecution was pursued under UAPA provisions. FATF also reports abusive funding practices for the year 2025[20], which are currently also done by many known international terrorist organizations throughout the world.
Numerous examples of infrastructure being used for fraudulent purposes include the use of e-commerce or online payment services, that is, payment processors within a fundraising environment; Peer-To-Peer Payments (P2P) and online crowd funding mechanisms integrated into social media; Virtual Assets such as cryptocurrency and Electronic Wallets; Non-Profit Organizations (NPO), Front Corporations, and Informal Money Transfer Systems.
India-Specific Enforcement and FATF Case Studies
On FATF’s update for 2025, two examples of how terrorist financing has evolved in relation to technology are discussed already, and to demonstrate the applicable developments for Indian terrorists, the following two examples are as follows:
Firstly, Jaish-e-Mohammed’s connection in the murder of 46 CRPF soldiers through suicide bombing of their convoy on February 14, 2019. This was made possible by tracing back the funds used to produce the IED (Improvised Explosive Device: Destructive Device such as bomb) through the use of the e-commerce platform, Amazon, for the purchase of aluminum powder. This indicates an alternative means of obtaining materials used in the preparation of IEDs for terrorist purposes, utilizing digital market place platforms to acquire the necessary materials.
Secondly, in the Gorakhnath Temple Attack on April 3, 2022, the attacker used PayPal and an encrypted VPN connection to facilitate the blending of his funds with foreign funding sources, demonstrating the role of the Digital Financial System in promoting the digital radicalization of terrorists. Both of these cases illustrate the types of financial services that the FATF has identified as being abused by using formal finance channels, digital payment systems, e-commerce platforms, and opaque methods of obfuscation, such as the use of VPNs, to hide the movement of funds utilized by terrorist organizations to finance their movements.
According to the documentation provided by the Government of India, at the end of March 31, 2024, 598 cases of Terrorist Financing have been Registered by the NIA; 461 charge sheets have been filed and 128 convictions successfully completed at the trial stage for terrorist financing matters. A recent operation against a connected wood-smuggling organization of ISIS, has led to the recovery of 9.7 crore cash and gold and 25 bank accounts linked to terrorist financing in India, relating to the ISIS connected radicalization module operating from Maharashtra, being frozen.
Doctrinal Implications and International Parallels
The use of online strategies for recruitment and funding for terrorist activities creates competing views concerning the implementation of laws aimed at curbing the incidence of terror acts juxtaposed to the constitutional mandate. In the United Kingdom, judicial oversight is based on the European Convention on Human Rights (ECHR); therefore, any response to combat terrorism via digital surveillance or financial tracking must be proportional based on the A v Secretary of State for the Home Department ruling. In the United States, the applicable statute against the provision of ‘material support’ was established in Holder v Humanitarian Law Project to prohibit all-inclusive behaviors, that is, the exercise of constitutional rights, such as free speech and social media activity that are tied to terrorist organizations as part of the new focus on prevention. In India, K.S. Puttaswamy (Retd.) v. Union of India protects an individual’s right to privacy by preventing governments from collecting all digital data without a warrant. However, in Kartar Singh vs State of Punjab, it was ruled that governmental bodies have the authority to enact special legislation to combat terrorism, provided that such special legislation has adequate standards of procedure and judicial review in place. Therefore, these three viewpoints clearly demonstrate that changes to terrorism law doctrine are necessary if we wish to strike a balance between protecting our rights and delivering justice to victims of terrorism.
The Global War on Terror and the Architecture of Terrorist Financing
The attacks by Hamas on October 7, 2023, changed the way people think about and deal with terrorism. With around 1,200 civilians dead and many types of violence and kidnapping happening during those attacks, it showed people that even though there were counter-terrorism efforts for many years, terrorist organizations like Hamas have the ability to continue operating. After those attacks, Israel began military operations being called ‘Operation Iron Swords’ to take out the military capabilities of Hamas in Gaza. Also, on the same day, Hamas, along with Palestinian Islamic Jihad, created a joint digital fundraising campaign using social media networks and encrypted communications. Soon after that, this type of fundraising activity was copied by Hezbollah. This fundraising effort is being done through transnational digital networks using a number of countries, encrypted forms of communication, quasi-media, and virtual currencies. Thus, demonstrating how important these types of digital infrastructures are today to terrorist funding efforts.
The increased attention given to the globalization of Counter-Financing Terrorism (CFT) frameworks has intensified the introduction of new CFT frameworks since October 2023, which adopt a preventative rather than a reactive idea of criminal liability. Under international law, terrorist financing can become a ‘violence offence’ without the actual committal of violent acts. The Financial Action Task Force (FATF) has outlined in its Global CFT initiative that crowd funding, non-profit organizations, and virtual assets are among the many venues through which terrorist financing may arise, and are therefore at high risk and susceptible to exploitation. Complementary to this framework, the United Nations Security Council’s 1267 sanctions regime provides a mechanism for the freezing of assets and financial restrictions against individuals and entities identified as being associated with Al-Qaeda and ISIS. India has implemented the obligation to adhere to these international legal instruments through domestic laws, and has established statutory measures in the Unlawful Activities (Prevention) Act, 1967 provided under Sections 15, 17, 18 and the Prevention of Money Laundering Act, 2002; Section 5, which create an effective environment for identifying and confiscating all types of assets used to provide financial support to terrorism. In understanding the threat of cyber-enabled terrorism, we must take into consideration not only the structure of cyberspace itself, but also how the decentralized, anonymous, jurisdictionally obscure, and low entry barriers that characterize cyberspace provide non-state actors with an environment that may challenge legitimate state sovereignty using asymmetric means. Cyberspace offers terrorist organizations unprecedented opportunities to recruit, radicalize, solicit funds, and co-ordinate attacks against civilian populations through the enhancement of the means of escape from the traditional means of law enforcement. Weimann states that cyberspace has also afforded terrorist organizations the opportunity to operate under a protective cloak of invisibility, increasing their ability to organize and support their activities across national borders while complicating foreign enforcement of their activities. Likewise, Hoffman notes the capacity of digital platforms to amplify terrorist organizations’ ideological messages and to exert their influence beyond the borders of the state. Finally, the work of Sageman regarding decentralized radicalization highlights the fact that the creation of networks enables individuals to act unilaterally without a commanding authority. The attacks of October 2023, along with an increase in scholarly work regarding crowd funding, has identified financial support for terrorism as a significant yet frequently overlooked strategy for funding terrorist activities. Scholars have highlighted that certain terrorist organizations, including Hamas, are able to take advantage of the regulatory gaps in the digital fundraising ecosystem and hide their funding efforts through the use of charitable or humanitarian narratives. Even with enhancements in international co-operation and in counter-terrorism regulations, there remains a significant divergence in states’ definitions of terrorism and appropriate restrictions to fundamental rights when enforcing counter-terrorism measures. As Letho points out, the ability to hold people accountable globally for terrorism requires adherence to uniform legal principles that encompass all levels of financing, logistical support and economic support, and yet do not violate the foundation of human rights under international law.
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Crowd Funding: Legal Structure and Regulatory Challenges
India has developed a counter-terrorism financing framework primarily focused on enforcement and based on the use of the Unlawful Activities (Prevention) Act (UAPA) in conjunction with the Prevention of Money Laundering Act (PMLA) to combat the digital methods used for raising funds by terrorist organizations. An examination by the National Investigating Agency (NIA) has confirmed that terrorist financing is commonly done via online platforms and encrypted messaging apps masquerading as charitable or religious entities and supports the central role that Section 17 of the UAPA plays in criminalizing financial assistance to terrorist organizations without regard for the existence of actual violence. The Enforcement Directorate supports this framework through its proactive seizure and forfeiture of assets in accordance with the PMLA, designating digital currencies and any other assets associated with them as proceeds of crime. This hybrid model of criminalization, disruption of financial systems, and confiscation of assets parallels current enforcement practices worldwide aligned with the FATF (Financial Action Task Force’s) international standards and demonstrates India’s prioritization of financial disruption as a means of preventing terrorist networks from operating.
Terrorist Financing in the Digital Ecosystem: Funding as an Emerging Risk Vector
Since their inception, terrorist networks have depended upon a variety of legal and illegal financial networks to fund their operations. For example, Hezbollah has received both state sponsorship and profits derived from drug trafficking and money laundering operations; Al-Qaeda has traditionally relied on rich private individuals to help them fund operations; while ISIS has established a multi-pronged approach to generating revenue including taxation of citizens and international extortion, territorial control, and oil production revenue. The evolution of the Internet has greatly affected how terrorism organisations raise, regulate, and distribute funds. The anonymity afforded by the internet has opened up a global market place via the internet for potential donors, thus increasing their pool of supporters. The emergence of digital ecosystems will greatly affect how many terrorist organizations generate revenue. In addition to utilising the many different ways in which terrorist groups are obtaining funds, the emergence of digital ecosystems has allowed for the emergence of new methods of generating funds. New technologies such as online bank accounts, credit cards, cryptocurrency, crowd funding have become a popular method of generating funds, creating a new layer of complexity for policing and investigating terrorist organisations. Crowd funding is especially disadvantageous because it entails considerable risk in terms of potential criminal prosecution but has been proven to produce minimal financial returns for those terrorist groups utilising it. Crowd funding is primarily a secondary source of funding for terrorist organisations, as well as being an unreliable source of revenue.
Indian Enforcement Experience: PMLA–UAPA Convergence
Indian enforcement agencies have been active in disrupting operations conducted by terrorist factions through online crowd funding for support, particularly as demonstrated by the increase in kidnapping and other unlawful activities, as well as through the Unlawful Activities Prevention Act (1967) and the Prevention of Money Laundering Act (2002). Specifically, the digital methods utilized to fund terrorist acts through small amounts through the internet and other technologies such as encrypted messaging, as well as bitcoin, establish a digital footprint that allows Indian authorities to apply Section 5 of the Prevention of Money Laundering Act to seize those funds and prosecute terrorist financing under Sections 17 and 18 of the UAPA. Recent actions taken by the Enforcement Directorate to attach donations received and use shell bank accounts to conceal the true source of those funds before returning those funds to terrorist operatives demonstrate the use of a ‘follow the money’ method, which is consistent with FATF Recommendations 6 and 8, in treating crowd funding not only as an instrument to fund a terrorist act, but also as an avenue for conducting terrorist financing that is subject to seizure, prosecution, and forfeiture.
The Comparative Doctrinal Approaches: India-United Kingdom-United States
India’s anti-terror financing laws are largely the same as those of the US and UK but differ significantly in terms of how strictly they are enforced. Under the U.S.’s PATRIOT Act, there is a complete ban on providing financial assistance to anyone who has been designated by the government as a terrorist organization, even if there was no intent to assist a terrorist organization. The UK Terrorism Act places similar restrictions as does the U.S. but provides for a degree of proportionality and therefore has greater authority over the administration of online fundraising efforts. India’s framework is most similar to the U.S.’s PATRIOT Act. In the case of Kartar Singh v. State of Punjab, the Supreme Court of India upheld the law’s recognition of the need for extreme measures to prevent acts of terrorism to safeguard the country. It was also held in other cases, such as Arup Bhuyan, PUCL, and Puttaswamy, that the element of intent and proportionality must be considered as well as that fundamental rights should be protected when using centralized technology to monitor financial transactions. Thus, it can be said that this line of cases was decided based on an ongoing balancing effort between technological disruption of terrorism finance and the protection of fundamental rights.
Indian Enforcement Experience: Digital and Crowd Funding-Linked Terror Financing
The UPA and PMLA, which give law enforcement agencies the ability to conduct investigations into, identify, seize and confiscate assets that are linked to terrorism without regard for their source of origin and have a history of liability based upon the purpose of the funds. The implementation of enforcement practices by law enforcement agencies reflects a risk-based approach aligned to the guidance of the FATF, with the determination of donor anonymity, platform fragmentation and the movement of funds from nation to nation as areas where donation based crowd funding is very susceptible, and where enforcement agencies face ongoing challenges with locating and tracing micro-donations and obtaining co-operation from entities operating outside of India; both of which emphasise the necessity to hold reporting at the platform level and the need for better co-ordination between countries on this issue.
Following the attacks by Hamas on October 7, 2001, and the Second Gaza War, Hamas made use of digital platforms and social media to gather funds for a variety of seemingly legitimate humanitarian efforts while advertising their programmes as being generic. Due to the cessation of traditional forms of funding as a result of asset freezes imposed on them, Hamas turned increasingly to cryptocurrency wallets, NFTs, and alternative forms of digital platforms to solicit small amounts of money from individuals that collectively represent a significant amount of financial support for Hamas’s operational activities despite the enforcement of various actions against Hamas. In this way Hamas could use multiple sources of digital donations to finance all aspects of their operations. ISIS has a different approach to fundraising than Hamas.
ISIS operates using a decentralized approach to fundraising with a consistent strategy. ISIS uses social media, peer-to-peer (P2P) networking sites, and encrypted messaging to ask for donations from their diaspora and from supporters around the world. Donations are made mostly using digital and virtual currencies and are then laundered through informal and unregulated money transfer systems. This demonstrates the way in which ISIS has exploited online and opaque financial channels for the purpose of funding terrorist activities.
Transition to Regulatory Analysis
With the case studies referred to here, one can see that there is a progression in the way crowd funding has been used by organizations. From being used occasionally, it is becoming part of the normal way that organizations finance themselves. Although many International Conventions and Domestic Statutes exist to stop terrorist financing, the regulatory need for more regulation and technological progress still support the use of crowd funding in financing terrorist activity.
Empirical Typologies of Crowd Funding Exploitation for Terrorist Financing
Recently taken law enforcement actions and classified information reveal that terrorist organizations systematically exploit crowd funding sources in various identifiable and repeatable ways. The identified patterns governing the use of crowd funding by terrorists are consistent with FATF indicators for an increased risk of exploitation, indicating that crowd funding continues to be a reliable source of terrorist funding as it relates to the totality of the funding ecosystem.
- Anonymous and Virtual-Asset-Based Payments
After the attacks on October 7, 2023, Israel collaborated with several major cryptocurrency exchanges including Binance[21] to halt the activities of Hamas-related Wallets and to transfer funds from those wallets to the Israeli treasury. This is in addition to previous law enforcement actions that resulted in the seizure of about $1 million worth of cryptocurrency (2021-2022) and an estimated $1.7 million linked to the Quds Force of the Islamic Revolutionary Guard Corps. Similar cases were identified by France’s Financial Intelligence Unit (TracFin) regarding similar crowd funding schemes that used prepaid cards, which were then converted into cryptocurrencies and sent to these accounts through exchanges located in both Iraq and Syria, totalling about €250,000 across sixty-three different donors. These examples point to the growing reliance on virtual currency by terrorist organizations and expose the continuing regulatory challenges tied to FATF Recommendations 6 and 15 regarding Targeted Financial Sanctions and regulation of virtual assets and Virtual Asset Service Providers as defined by the FATF.
- Mobilization of Public Attention Through Digital Platforms
The viral expansion of crowd funding projects through social media is generating great visibility for crowd funding initiatives among many people as a result of the use of social media to enhance awareness of crowd funding campaigns. During the ‘Iron Sword War’, Hamas had a social media campaign that utilized hashtags to promote ‘Equip A Mujahid’ in 2017 through social media, websites and standard crowd funding platforms; this was also the same method that ISIS employed a donation platform within an encrypted messaging application where it provided information to donors on how to donate.
- False Humanitarian and Charitable Causes
The hidden or disguised purpose of terrorist financing is often found in humanitarian aid and charitable donations. The Israeli security services collected evidence that numerous campaigns were promoted as providing humanitarian assistance to Gazan civilians; however, these campaigns, masked as providing assistance, actually funded both Hamas and the Palestinian Islamic Jihad. Similarly, the FBI found that between 2012 and 2022, crowd funding campaigns purported to be charitable and were used as fundraising vehicles for ISIS.
- Reliance on Modest, Aggregated Donations
Crowd funding campaigns used to support terrorism rely on collecting many small donations from individual donors rather than large amounts. Using many small donations reduces the chance of potentially deterring or discouraging donors from making their donations, making it much easier to accumulate a large amount of money. For instance, between 2016 and 2018, both the Palestinian Islamic Resistance Movement (Hamas), through its armed wing called Brahmad al-Qasama, and the Ibn Taymiyyah Foundation raised hundreds of thousands of dollars worth of donations, primarily in the form of bitcoins.
- Use of Smaller or Lightly Regulated Platforms
When conventional crowd funding websites deny the request of terrorist organizations to raise funds, they often look for alternative methods. In 2021, the Canadian Government designated numerous radical, extreme-right groups as terrorists by classifying them as such. Consequently, this has resulted in a number of particular extremist right organizations, for example, Proud Boys, Blood & Honor, etc., switching over to alternative, less-regulated crowd funding platforms, while also leaving behind more prominent crowd funding sites that have more extensive oversight and control mechanisms.
- Cash Injection and Layering Techniques
Another method for donating cash is to open a checking account with a commercial bank in the name of a different company or organization and give it to the crowd funding platform. This bank account holds all the funds donated through the crowd funding platform, which can then be used to support multiple crowd funding projects. Using this kind of structure creates many levels of anonymity for the donor and makes it much harder to trace back any donation-related activity.
- Multiple Card Charging and Donor Obfuscation
Multiple individuals providing funds repeatedly through credit card transactions are common on crowd funding websites. Money is sent to crowd funding sources through a relatively small number of credit cards owned by a small number of people, which obscures the original source of funds and creates challenges for payment service providers to ascertain the source of funds.
- Exploitation of Non-Profit Organizations
Crowd funding projects sometimes involve alleged legitimate or fraudulent non-profit entities, where funds go through appropriate not-for-profit organization channeling but are then redirected to fund terrorist groups. A Spanish police probe in 2021 demonstrates this situation with a so-called ‘religious charity’ that was said to raise money on behalf of Syrian orphans but ultimately funded Al-Qaeda.
- Use of High-Risk Jurisdictions and Tax Havens
Financial resources are often transferred by entities located within jurisdictions that are regarded as risk prone or tax havens using a mixture of methods, including wire transfers, credit/debit cards, and cash. This multi-layered approach creates an environment of difficulty in establishing the source of these funds, allowing them to be transferred across national borders with ease, contributing to the financing of terrorist organizations such as ISIL and al-Qaeda. Throughout a range of sources and in numerous ways, it has been confirmed that Iran provides extensive backing to Hamas. Iran has not only established numerous shell corporations to support its affiliate, but it has also been involved in acquiring gold and other valuable metals on behalf of Hamas. In addition, Iran has provided Hamas with several other forms of undisclosed support valued in excess of $100 million annually.
Cross-Cutting Feature: Anonymity as an Enabler
Anonymity is not a classification in this typology; rather, it represents a broad characteristic common to all types of crowd funding-based funding methods for terrorists. Many crowd funding sites do not provide sufficient identity verification systems for the organizers, intermediaries, or donors. This lack of identity verification makes it extremely difficult to maintain a transparent environment and creates many opportunities for abuse to take place. The anonymity of this type of fundraising creates enormous difficulties when it comes to monitoring and enforcing the prohibition of using crowd funding to support terrorist activity.
Conclusion
Terrorist financing is increasingly using the internet-based forms of fundraising, especially crowdsourcing websites, which have low costs and little oversight regulatory across jurisdictions. Crowdsourcing websites, which have low costs and little oversight regulatory across due to financial sanctions, seizure of assets, and enforcement. Although many jurisdictions now have laws prohibiting terrorist financing, significant regulatory voids still exist when it comes to donating to crowdsourcing accounts, as well as through digital fundraising agencies. In India, for example, the Enforcement Directorate and the National Investigation Agency have previously used both the Prevention of Money Laundering Act and the Unlawful Activities Prevention Act to track, seize and confiscate funds used in terrorist activity. These findings demonstrate that there is a pressing need to create a more robust and technology-responsive regulatory framework that includes real-time monitoring and due diligence requirements for online contributions. In order to successfully navigate the obstacles created by these digital funding sources, the following recommendations should be  considered for implementation: (i) implementing proactive, law-enforcement-based counter-terrorist financing rules for all crowdsourcing platforms; (ii) establishing clear and enforceable architectural standards for linking digital assets; (iii) ensuring that, where possible, countries co-ordinate with their financial bodies, law enforcement authorities, payment and transfer intermediaries and technology companies with respect to counter-terrorist financing efforts; (iv) increasing consumer awareness of legitimate crowdsourcing efforts compared to criminal exploitation; (v) developing automated monitoring mechanisms and machine-based systems with the protection of privacy interests and human rights; (vi) ensuring that a legal system is established for maintaining legitimate technological innovation; and (vii) including donation-based crowd funding in the FATF Mutual Evaluation Process in order to assess and identify potential systemic regulatory voids.
[1] Kartar Singh v. State of Punjab, (1994) 3 SCC 569 (India).
[2] Terrorism Act 2000, c. 11 (UK).
[3] Holder v. Humanitarian Law Project, 561 U.S. 1 (2010).
[4] Unlawful Activities (Prevention) Act, 1967, S. 15–18 (India).
[5] Proceeds of Crime Act 2002, c. 29 (UK).
[6] 18 U.S.C. §§ 2339A–2339B (2018).
[7] Arup Bhuyan v. State of Assam, (2011) 3 SCC 377 (India).
[8] People’s Union for Civil Liberties v. Union of India, (1997) 1 SCC 301 (India).
[9] A v. Sec’y of State for the Home Dep’t [2004] UKHL 56.
[10] Justice K.S. Puttaswamy (Retd.) v. Union of India, (2017) 10 SCC
[11] United Nations Security Council Resolution 1373, ¶¶ 1–3, U.N. Doc. S/RES/1373 (Sept. 28, 2001).
[12] United Nations Security Council Resolution 2396, ¶¶ 5–7, U.N. Doc. S/RES/2396 (Dec. 21, 2017).
[13] United Nations Security Council Resolution 2462, ¶¶ 4–7, U.N. Doc. S/RES/2462 (Mar. 28, 2019).
[14] United Nations Security Council Resolution 2617, ¶ 3, U.N. Doc. S/RES/2617 (Dec. 30, 2021).
[15] FATF Recommendation 5, Criminalization of Terrorist Financing, in FATF Recommendations.
[16] FATF Recommendation 8, Non-Profit Organisations, in FATF Recommendations.
[17] FATF Recommendation 15, New Technologies, in FATF Recommendations.
[18] FATF, Risk-Based Approach for Virtual Assets and Virtual Asset Service Providers (2023).
[19] Fin. Action Task Force (FATF), International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation (FATF Recommendations) (updated 2023).
[20] FATF, Plenary Outcomes Statement (2024–2025) (warning against over-implementation and undue restriction on civil society).
[21] Binance, Statement on Cooperation with Counter-Terrorism Authorities (2023).
