Throughout 2025, we have witnessed the rapid evolution of fundraising tactics used by violent extremist groups across South Asia. Despite constant military and political crackdowns, it remains challenging for counterterrorism financing measures to be globally impactful. The region’s financial landscape is rapidly transforming with a surge in fintech adoption and mobile wallets, with global cryptocurrency markets hitting record highs, allowing access for both licit and illicit users. With record remittance flows, these trends create a fertile ecosystem for extremist financiers to hide illegal fund transfers within legitimate volumes. This convergence makes it crucial to understand how these violent groups sustain their financial operations while regulators risk falling behind.
This evolution marks a shift towards more advanced technology-driven strategies from traditional tactics like hawala networks and front charities. This Insight draws on recent open-source case studies and comparative data from India, Pakistan, Bangladesh, Afghanistan, and Indonesia to analyse these advancements and explore how extremist actors misuse cryptocurrency, crowdfunding platforms, and digital payment apps to evade regulatory scrutiny, enhancing the survival and sustenance of their financial networks. Moreover, the Insight underscores the operational repercussions of such financial innovations and proposes actionable recommendations for policymakers, fintech corporations and law enforcement agencies to interrupt terror financing impactfully and sustainably.
The Evolution of Terrorist Financing in South Asia
Terror groups operating in South Asia have traditionally relied on informal systems such as Hawala networks and unregulated charities. Hawala relies on trust-based operatives to move largely untraceable funds without moving physical cash, using community networks to hide illegal funds from regulators. Similarly, charities also have been misused to transfer money concealed as humanitarian efforts or donations, exploiting legal greys and community support. However, this situation is rapidly changing with the widespread adoption of digital financial technologies. Cryptocurrencies, digital wallets and online payment apps and platforms provide novel financial opportunities for extremist groups along with speed, anonymity and cross-border reach.
Indonesia is a good example of this digital transition, with groups exploiting wallet hierarchies and decentralised exchanges to obstruct asset seizure. The cases seen in this country exemplify how such funds flow freely within digital ecosystems while evading traditional oversight. Furthermore, some quasi-religious organisations also act as fronts, leveraging cultural legitimacy and community trust to covertly sustain extremist causes. These dynamics mirror wider regional trends. South Asian violent extremist groups are increasingly exploiting digital finance by adapting to an intensified counterterrorism crackdown. The borderless nature of such transactions allows international funding, expansion of recruitment and operational reach. This directly challenges traditional enforcement tools and regulatory frameworks, which are not adapting in accordance with the advancing technologies. Without necessary adaptation, law enforcement can be outmanoeuvred by advanced terrorist financing networks across South Asia.
Digital Financing Innovations and Operational Implications
Terrorist groups operating across South Asia have adopted various notable innovations in their funding mechanisms. Cryptocurrency wallet fragmentation and laundering are prominent innovation that enables extremist groups to form various small-scale cryptocurrency wallets. Similarly, wallets that produce multiple addresses linked to a single seed allow concealed value transfers within a unified network. These transfers are also supported by mixers and tumblers that blend coins from different sources and mask transaction origins, further obscuring traceability.
Crowdfunding platforms that are commonly used for legitimate causes, such as GoFundMe, have been exploited for extremist fundraising. For instance, radical groups such as Hayat Tahrir al-Sham, Islamic Relief Worldwide and others have launched campaigns in the name of disaster relief to channel resources covertly. Investigations have recorded how lenient Know Your Customer (KYC) regulations and insufficient verification strategies allow such campaigns to operate undetected. Extremists exploit daily used payment and messaging apps such as Telegram by breaking transfers into micro-transaction sums that stay below the minimum detection threshold, evading suspicion.
Lack of consistency and fragmented regulation across South Asian countries allows extremists to exploit the gaps in legal enforcement and expedite the cross-border flow of funds. These innovations show the resilience of extremist operations supplemented by robust financial agility. Consequently, such groups comfortably expand, recruit and sustain their extensive transnational networks for violent operations. Interdiction efforts are further complicated by the use of heavily anonymised tools like encrypted messaging channels, decentralised digital currencies and mixing services such as mixers and tumblers. This complicated, layered transactional network spanning multiple platforms highlights the need for more adaptive and refined counterterrorism measures. These innovations thrive due to inadequate oversight and divided enforcement in South Asia.
Regulatory and Enforcement Challenges Across South Asia
The regulatory and enforcement regimes across South Asia are fragmented and uneven in responding to terror funding. Different countries have different legal frameworks, and regulatory responses and policies for interagency and international cooperation further complicate multinational engagement on this issue. However, the Indonesian SIPENDAR intelligence-sharing platform allows real-time data exchange between law enforcement agencies and financial institutions to counter cryptocurrency-related exploitations.
Compared to the inadequate legal systems in place in Bangladesh and Afghanistan, Indonesia’s efforts mark progress in the broader region’s counter terrorist financing efforts. Moreover, the operability of religious Non-Profit Organisations in South Asia is further hindered by regulatory obstructions. These organisations play a vital social role and remain susceptible to being misused as financial conduits for violent extremists. There is a need to govern these organisations with a balance of cultural sensitivity and regulatory vigilance to ensure legitimate socially-beneficial activities are not undermined.
Fintech institutions struggle to balance customer privacy with Counter-Terrorism Financing (CTF) compliance. They are also hindered by limitations in technology, such as poor integration of Anti-Money Laundering (AML) technology, data privacy and regulatory conflicts over-alerting and false positives, as well as inadequate cross-border cooperation. There is a need to harmonise legal standards regionally to address such systematic hindrances and foster cooperation through joint platforms and information-sharing policies. Such efforts will improve transnational governance coherence, minimise duplicate efforts from different sectors and facilitate appropriate interventions at the right time. These challenges are clearer when viewed through country-level case studies.
Regional Financing Tactics
Various case studies illustrate the evolution of terror funding strategies across South Asia, highlighting the role of digital innovations that directly enable violent extremist activity. In Pakistan, Lashkar-e-Taiba (LeT) has adapted an advanced cryptocurrency approach since at least 2016, and uses a complex network of wallets that distribute funds across different exchanges and jurisdictions. LeT evades tracing efforts by obscuring the origin and destination of the funds through wallet fragmentation and layering, making tracking transaction flows difficult. This financial resilience allows LeT to recruit members, procure ammunition and finance cross-border operations against countries such as India. This highlights a clear and intentional operation behind complicated funding strategies.
Meanwhile, Indian counterterrorism officials have also revealed that since the late 2010s, digital wallets and payment apps have been widely used to enable micro-transactions that fund radicalised cells in conflict-prone regions in India, such as Jammu and Kashmir. These transactions allow such cells to maintain logistical support, recruit new members, and fund local attacks. As mentioned above, fragmentation of funds into micro-transactions enables extremist organisations to evade financial monitoring and conventional detection strategies. This sustains their extremist agendas with stealth and stability.
Bangladesh has also witnessed a surge in crowdfunding campaigns masquerading as humanitarian or religious initiatives with covert connections to extremist groups, particularly following the political upheaval in 2024. Investigations show NGOs running fraud campaigns that siphon diaspora and local donations to facilitate indoctrination, further propaganda dissemination and recruitment. Some extremist groups have misused crowdfunding platforms by diverting the proceeds collected under the guise of disaster relief towards Islamist networks operating in the region. Such fraudulent usage exploits KYC gaps and platform leniency to fund groups such as Al-Qaeda in the Indian Subcontinent (AQIS) and the Islamic State of Khorasan (ISK).
Afghanistan has witnessed ISIS-affiliated factions operationalise the use of stablecoins, specifically Tether (USDT) on the Tron Blockchain since the early 2020s, facilitating cross-border funding despite global anti-money laundering and terror financing endeavours. A study documented significant transfer linked to ISIS networks facilitating purchasing arms and personnel movement within Afghanistan and neighbouring territories. Using stablecoins provides stability and less volatility to ISIS’s funding strategies compared to traditional cryptocurrencies, enhancing the impact of their operation during conflicts.
Indonesia is also facing challenges from decentralised exchanges and religious NGOs acting as fronts to facilitate cryptocurrency donations to extremist groups. These mechanisms are leveraged by groups like Jemaah Islamiyah (JI), which has been digitising fundraising since the mid-2010s by using blockchain with community trust, simultaneously creating an adaptive financial system supporting local militant operations and transnational extremist connections. These examples show how digital financing innovations enhance the operability of violent extremist groups by strengthening their financial adaptability, amplifying their cross-border reach, and elongating the sustainability of their violent campaigns.
Strategic Recommendations
The challenges posed by the evolving nature of South Asian terrorist financing require a multi-pronged, technologically advanced and transnationally cooperative strategy. To start, Fintech sector operators and regulators must produce dynamic and tech-based red-flag typologies that can detect incoming suspicious patterns such as wallet fragmentation, coordinated cross-platform fundraising exploitation and systematic micro-transaction laundering. With the aid of private sector partners, the authorities can map and disrupt wallet clusters connected to terrorist networks by combining machine learning and blockchain analytics with open-source intelligence. This will increase the precision and speed of financial crackdowns. However, authorities will have to overcome hurdles such as fragmented data, privacy limits, inadequate resources, and inconsistent cross-sector cooperation.
While an obvious suggestion would be to enhance regional and international cooperation in South Asia, given the historical and political complexities, a more realistic approach would be to enhance anti-extremist digital finance efforts by tech platforms and industries. Fintech firms struggle with CTF compliance, and many do not have strong AML structures, skilled staff or impactful regulatory integration. There are gaps in transaction monitoring and customer due diligence due to rapid technological growth compared to the development of robust AML/CTF controls. Furthermore, inconsistent regulators and limited cross-border cooperation obstruct effective AML efforts, leaving the firms vulnerable to exploitation.
Third, crowdfunding and digital payment apps must improve KYC mechanisms to proactively identify and target fundraising campaigns with extremist financial links to minimise unintentional facilitation. This can be achieved by using culturally informed risk assessment tools such as Root Cause Analysis, a systematic method that reveals the underlying reasons behind issues by examining patterns and behaviours instead of the surface symptoms. This helps platforms comprehend local behavioural trends, enabling fraudulent fundraising. Alongside expert judgment from regional specialists and big data platforms such as Palantir, which analyse demographic and language cues, these tools aid platforms in differentiating between legitimate charitable activities and fraudulent extremist fundraising.
There is also the need to invest in capacity building initiatives for fintech compliance teams, financial intelligence units and law enforcement. Practitioners can benefit from specialised training focused on emerging financing methods and their intersections with violent extremist groups. They will be better equipped to detect, analyse and intervene more impactfully with a better understanding of technologies like stablecoins, decentralised exchanges, and privacy-enhancing techniques to counter sophisticated terror finance schemes. The application of these interconnected strategies can improve South Asian security and regulatory systems.
Conclusion
The economic environment of violent extremist groups in South Asia is rapidly evolving by adapting to modern digital financial tools in 2025. These groups blend cryptocurrency, crowdfunding and digital payment networks to strengthen their operational funding and resilience. This Insight has offered a focused, comparative regional analysis focusing on the financing innovations and their connections to violent extremism. To address this continuous threat impactfully, legislators, enforcement agencies and technology providers must pool their resources to ensure the implementation of coordinated, tech-driven disruption strategies that are tailored to address the problems arising in the digital age that threaten broader South Asian regional security and stability.
–
Ashreet Acharya is a PhD candidate at Liverpool Hope University focusing on conspiracies and political extremism. He holds master’s degrees in Intellectual Property Rights and Data Protection, and Corporate Laws, and is an Indian bar-qualified Advocate. Ashreet has diverse experience in academia and the ed-tech sector, with several publications on contemporary legal and social challenges.
—
Are you a tech company interested in strengthening your capacity to counter terrorist and violent extremist activity online? Apply for GIFCT membership to join over 30 other tech platforms working together to prevent terrorists and violent extremists from exploiting online platforms by leveraging technology, expertise, and cross-sector partnerships.