The report underscores deficiencies across jurisdictions: 69 per cent of FATF‑reviewed countries are struggling to properly investigate, prosecute or convict terrorist financiers. FATF President Elisa de Anda Madrazo cautioned that without urgent action from both government and private sectors, terror financiers will exploit these enforceable legal, financial and technological gaps. In a marked policy shift, it states that “certain terrorist organisations have been and continue to receive financial and other forms of support from several national governments”.
India‑Centre, Punjab‑based attacks, and the digital frontier
The body references two major Indian terrorist incidents: the February 2019 Pulwama attack, where materials were procured via Amazon‑style electronic marketplaces, and the 2022 assault on Gorakhnath Temple, funded through PayPal transfers routed through VPNs. The Pulwama bomber acquired aluminium powder online—a dual‑use material—while the Gorakhnath attacker transferred about ₹669,841 before PayPal froze the account. These cases demonstrate the anonymity and difficulty in tracing digital finance.
According to the report, terrorist networks increasingly adopt “mixed use of diverse methods,” integrating traditional channels—such as cash, hawala, shell companies—with digital tools including crowdfunding, virtual assets and social‑media fundraising. Lone actors are proliferating; young individuals self‑funding via petty crimes or micro‑donations are leveraging gaming and OSN exploits.
Global inadequacies in tackling digital facilitation
FATF warns that e‑commerce platforms, online payment services and VPNs are being misused to finance terrorism. It highlights glaring gaps in tracking systems and regulatory frameworks across many economies, particularly those with burgeoning digital sectors. Crowdfunding sites and payment intermediaries remain under‑monitored, enabling terrorists to obscure identities and fund movements through anonymity‑enhancing crypto transactions.
Case studies reveal how dual‑use goods are shipped via e‑commerce, funds laundered through shell firms and NPOs, and cryptocurrencies exploited. The digital-fintech age has reshaped terrorist financing landscapes; these aren’t isolated threats but evolving ecosystems that couple low‑scale, low‑visibility donors with decentralised platforms and international logistics.
State-sponsored terrorism: India‑Pakistan context
While FATF stops short of naming specific states, the emphasis on government complicity amplifies India’s push to reinstate Pakistan’s grey‑list status and pursue international sanctions. India has been active at forums including the World Bank and UN, underscoring state-backed terror as a threat to regional and global security.
Diplomatic channels have intensified since June, when India urged FATF for renewed punitive measures and grey‑listing. The FATF statement has provided India with fresh leverage, reinforcing calls for targeted sanctions, travel bans and pressure on financial institutions to enforce transparency.
FATF’s prescribed counter‑measures
The report outlines several targeted steps. First, digital payment and e‑commerce platforms must implement rigorous KYC and surveillance systems tailored to detect dual‑use procurement patterns. Second, regulators need to collaborate internationally to close cross‑border digital finance vulnerabilities. Third, there is an urgent need to monitor crowdfunding, virtual assets and social‑media‑based fundraising to identify illicit transfers or shell‑entity donations. Fourth, jurisdictions must activate public‑private partnerships to develop red‑flag indicators and share intelligence efficiently.
FATF announced a webinar scheduled for 22 July 2025 to support global stakeholders, including member states, financial institutions and tech companies, in analysing and responding to emerging financial threats.
The global counter‑terrorism community now faces a defining moment. As militants adapt with digital agility, regulatory and investigative frameworks must evolve in tandem. The inclusion of state sponsorship within FATF’s purview marks a profound shift, reinforcing calls for accountability and global cooperation to stem the nexus between state power, digital finance, and extremist violence.