Terrorist Use of Hybrid Threat Finance Networks

This research briefing by Jessica Davis examines how terrorist financing is increasingly conducted through “hybrid threat finance networks” that combine traditional financial systems with digital assets. The paper argues that cryptocurrencies and other digital assets are not replacing established methods such as cash, banks, money service businesses and hawala networks; rather, they are being layered onto existing systems to move funds more quickly, cheaply and with greater opacity. Drawing on a dataset of over 21,000 datapoints across 1,150 records and 19 fields, the report finds that digital assets are now a growing feature of terrorist financing activity, particularly in the transfer of funds between supporters, facilitators and terrorist organisations.

The report analyses how terrorist actors use cryptocurrencies alongside informal value transfer systems and other financial channels, highlighting examples linked to the Islamic State and its affiliates. It concludes that hybrid financing networks are likely to remain the dominant model for terrorist financing and identifies stronger public–private cooperation and greater international regulatory coordination as key priorities for disruption efforts.