As we pause to remember the tragic events of September 11, 2001 (9/11), we are reminded that 9/11 has forever changed how the world combats terrorist financing.

The 9/11 attacks triggered a revolution in the financial surveillance landscape, forcing governments and institutions to rethink the structures that fund terrorism. Today, nearly a quarter century later, those threats have mutated—but so have our tools to fight them.

What is terrorist financing?

Terrorist financing refers to the process of raising, moving and using funds to support terrorist activities. Unlike other forms of financial crime, these funds may originate from both illicit sources (e.g., drug trafficking, smuggling, extortion) and legitimate ones (e.g., donations, charities or personal savings). The defining factor is not where the money comes from, but how it is used: to plan, promote or execute acts of terrorism.

According to the Financial Action Task Force (FATF), terrorist financing often involves small amounts of money spread across diverse channels, from hawala and money services businesses to cryptocurrencies, making detection difficult and demanding close international cooperation.¹ This complexity means countering terrorist financing requires both financial intelligence and international cooperation.

How terrorist financing has changed over time

Several key shifts underscore how the landscape has transformed since 9/11.

• Expansion of financial intelligence: Post-9/11, financial monitoring evolved into strategic intelligence. Tools like targeted sanctions under Executive Order 13224 and the integration of financial intelligence into law enforcement became central to disrupting terrorist funding. The scope of anti-money laundering (AML) regulations broadened to encompass sectors once overlooked, such as jewelers and hawaladars.²
• Rise of identity fraud: The formal financial system became more resilient, but adversaries adapted. Deepfakes, synthetic identities and counterfeit ID (e.g., passport cards) now challenge customer verification processes.³ Terrorist actors can exploit these tools to evade detection when moving funds.
• Virtual assets and de-risking dilemmas: The rise of virtual asset service providers (VASPs) has opened new channels for illicit transfers. At the same time, FIs face the risk of “de-risking,” or cutting off VASPs entirely to avoid regulatory liability, even though this can hamper oversight of digital flows.⁴
• Cartels designated as terrorists: Perhaps most consequentially, criminal cartels— long treated as drug trafficking organizations—are now being formally designated as terrorist organizations.⁵ This marks a fundamental shift in how states classify and combat them.

Response from FIs

Faced with this new reality, FIs and regulators have adopted several strategies, including but not limited to those listed below.

Regulatory and legal response

• Enhanced sanctions and intelligence access: U.S. authorities are leveraging new tools to trace cartel-linked financial flows. One example is the Terrorist Finance Tracking Program, which unlocks SWIFT messaging data when a nexus to terrorism is suspected.⁶
• Heightened due-diligence and compliance protocols: Firms must redesign their risk frameworks, especially for Mexican and Latin American dealings. Recognizing that law-abiding sectors (e.g., agriculture, fuel) may be fronted by cartels, institutions now implement deep due diligence, adverse-media mining and risk scoring beyond simple list screening.⁷
• Secondary sanctions and liability exposure: The foreign terrorist organizations (FTOs) designation triggers broader obligations—even indirect contact or support may lead to exposure under secondary sanctions regimes. Businesses could face criminal and civil liability, including against charges of “material support” or Anti-Terrorism Act lawsuits.⁸

Operational and technological response

• Innovations in detection tools: Institutions are increasingly adopting machine learning, graph-based models and privacy-preserving analytics to reduce AML false positives and improve threat detection accuracy.⁹ Gamified training programs help sharpen investigative capabilities against dark-web and crypto threats.
• Regulator outreach and cross-border coordination: Bodies like the U.S. Department of Treasury have intensified private-sector outreach via AML/counter-terrorist financing dialogues, fostering awareness of emerging risks and sharing best practices across the Middle East/North Africa and Latin American jurisdictions.¹⁰

The new era of terrorist financing

Two decades of progress have built sophisticated tools and frameworks, but criminals continue to adapt. FIs now face a landscape where organized criminal cartels are treated as terrorists, privacy-preserving technologies obscure flows and data intelligence must constantly evolve.

Moving forward, success hinges on continued innovation in detection technologies, agile risk frameworks and international collaboration. The next era will demand that regulated institutions act not just as gatekeepers, but as front-line defenders combining vigilance, transparency and foresight.

Dustin Eaton, CAMS, CGSS, CAMS-RM, CAFS, principal, AML & Fraud, Taktile, djenzwm@yahoo.com,

1. “FATF’s global efforts on combating terrorist financing,” Financial Action Task Force, https://www.fatf-gafi.org/en/topics/Terrorist-Financing.html
2. Juan C. Zarate, “How Efforts to Counter Terrorist Financing Have Evolved Since 9/11,” K2Integrity, September 12, 2022, https://www.k2integrity.com/en/knowledge/expert-insights/2022/the-evolution-of-cft-efforts
3. “How Has Terrorism Financing Changed Since 9/11?,” Institute for Financial Integrity, September 12, 2024, https://finintegrity.org/how-has-terrorism-financing-changed-since-9-11
4. Ibid.
5. Julie Watson, “US charges high-ranking Mexican drug cartel suspects with narco-terrorism,” AP News, May 13, 2025, https://apnews.com/article/627911a04e4072216db93cdeb4afe4f4
6. Carl A. Valenstein and Christian C. Contardo, “US Designation of Cartels as Terrorist Organizations Increases Risk of Doing Business in Mexico,” Morgan Lewis, March 24, 2025, https://www.morganlewis.com/pubs/2025/03/us-designation-of-cartels-as-terrorist-organizations-increases-risk-of-doing-business-in-mexico
7. Ron Giammarco, Walid Raad, Tom Scazzafavo, et al., “How cartels as foreign terrorist organizations create compliance risks,” EY, March 31, 2025, https://www.ey.com/en_us/insights/forensic-integrity-services/compliance-cartels-as-foreign-terrorist-organizations
8. Matteson Ellis, James Tillen and Maria Lapetina, “FCPA Changes & Terrorist Designations for Cartels Create Dangerous New Math in Latin America,” Corporate Compliance Insights, March 19, 2025, https://www.corporatecomplianceinsights.com/fcpa-changes-terrorist-designations-cartels-latin-america
9. Ahmad Naser Eddin, Jacopo Bono, David Aparício, et al., “Anti-Money Laundering Alert Optimization Using Machine Learning with Graphs,” Cornell University, December 14, 2021, https://arxiv.org/abs/2112.07508
10. “Joint Testimony Daniel Glaser, Deputy Assistant Secretary for Terrorist Financing and Financial Crimes,” U.S. Department of the Treasury, April 18, 2007, https://home.treasury.gov/news/press-releases/hp361