How terrorist financing differs from money laundering
EU law defines terrorist financing as the provision or collection of funds, by any means, directly or indirectly, with the intention or in the knowledge that they are to be used, in full or in part, to carry out terrorist offences (Directive (EU) 2015/849, Article 1).
Nothing in that definition requires the money to be criminal. Funds can come from a salary or a donation and the amounts can be small, so controls built to spot large sums of dirty money are not enough.
What CFT requires of a firm
- The same customer due diligence and monitoring as for money laundering
- A report to the financial intelligence unit when funds are suspected to relate to terrorist financing, regardless of the amount (Article 33)
- Screening against lists of persons under targeted financial sanctions, the subject of FATF Recommendation 6
FATF Recommendation 5 covers the criminal offence of terrorist financing. From 10 July 2027, Regulation (EU) 2024/1624 writes the sanctions check into customer due diligence itself (Article 20).
Why CFT matters to payments and crypto products
The products most exposed move small values quickly and across borders: remittances, prepaid cards and crypto transfers. The recitals of AMLD5 name anonymous prepaid cards and virtual currencies as terrorist financing risks, which is why that directive cut the prepaid exemption and brought crypto providers into scope.
CFT, AML or sanctions?
- AML
- Aims at the proceeds of crime being disguised as legitimate. CFT aims at funds of any origin reaching terrorism.
- Sanctions
- Prohibitions on dealing with listed persons, entities and countries, for many policy reasons. Terrorism-related lists are one part.
Where counter-terrorist financing shows up in a platform
Modules that do the work
- KYC / AMLIdentity checks, screening and ongoing monitoring, with the verification provider you choose.
- Compliance reportingTransaction monitoring, the Travel Rule and regulatory reports, ready for your regulator.
- Fraud & riskReal-time fraud scoring, limits and case management, with the risk engines you already trust.
Platforms that need it
Guides that go deeper
Where it is written
The laws and standards this page's facts come from.
- Directive (EU) 2015/849, the Anti-Money Laundering Directive, consolidated: Articles 1 and 33 (EUR-Lex)
- Directive (EU) 2018/843, AMLD5, recitals (EUR-Lex)
- Regulation (EU) 2024/1624, the AML Regulation, Article 20 (EUR-Lex)
- FATF, The FATF Recommendations, as amended June 2026
General information, not legal advice: what applies to you depends on your services and your market.