Terrorist financing is the provision or collection of funds, by any means and from any source, with the intention or knowledge that they will be used to carry out terrorism. In the UK it is criminalised principally by sections 15 to 18 of the Terrorism Act 2000 (TACT 2000), covering fundraising, use and possession of terrorist property, funding arrangements, and money laundering in connection with terrorism. Section 21A creates a duty on the regulated sector to report suspicion of terrorist financing.
How it differs from money laundering
The crucial distinction is one of direction. Money laundering is concerned with concealing the criminal origin of funds, looking backwards to where the money came from. Terrorist financing is concerned with the destination of funds, looking forward to how they will be used. Terrorist financing can draw on entirely legitimate money, such as salaries, donations or business income, and frequently involves small, low-value transactions. This makes it harder to detect using conventional money-laundering typologies, which tend to focus on large or unusual flows.
Why it matters
Because the funds may be clean and the amounts modest, detection depends heavily on context: links to sanctioned individuals or entities, high-risk jurisdictions, and unusual patterns relative to a customer’s profile. The Money Laundering Regulations 2017 explicitly require firms to guard against terrorist financing as well as money laundering, and OFSI administers asset-freezing measures targeting terrorist actors.
Who it applies to
The criminal offences under TACT 2000 apply to everyone; the reporting and preventive duties fall on the regulated sector under TACT section 21A and the MLRs 2017.