Terrorist Financing
What makes TF different
Terrorist financing is the raising, moving or use of funds for terrorist acts or organizations. Unlike money laundering, the funds may be entirely legal in origin-donations, salaries, business revenue-and amounts may be small. That makes "follow the large cash" logic unreliable; the focus is on purpose, destination and beneficiary. Exam concepts: TF risk assessment; fundraising through charities and non-profit organizations (risk-based, not automatic suspicion); self-funding and foreign terrorist fighters; kidnapping for ransom; hawala and informal value transfer; trade and virtual assets; and targeted financial sanctions under UN Security Council resolutions 1267 and 1373 and equivalent national regimes.
Traps
A frequent trap is treating NPOs as inherently high risk-FATF expects risk-based measures, not blanket exclusion. Another is confusing TF with proliferation financing: PF supports weapons of mass destruction programs, not terrorism, and is addressed through a separate sanctions framework. Sanctions asset freezes are preventive and apply without delay and without a criminal conviction; there is no de minimis threshold and intent is irrelevant to the freeze. Tipping off a designated person is prohibited.
Worked example
A retail customer receives many small inbound remittances from several countries and forwards most of the balance to a high-risk region. The amounts are below monitoring thresholds and the source is a legitimate salary. This still warrants escalation because the pattern fits TF: small, purpose-driven, destination-focused. Rule of thumb: for TF ask "where is it going and what is it for," not "where did it come from."