Across Borders ¦ German Money for Terror: How Extremist Groups Raise, Move, and Hide Funds

Why Prosecuting Terror Financing in Germany Is So Hard – and What to Do About It

The past decade has shown that terrorist financing is not an abstract concept but a persistent, adaptive practice exploiting both legal and illicit channels. Recent arrests and marathon trials underscore a frustrating truth for investigators and courts: proving that money sent from Germany actually reached a terrorist group – and tying it to specific crimes – remains difficult. Meanwhile, extremists leverage small donations, social media, crypto, and informal money networks to keep operations alive.

From Small Sums to Sustained Networks

The lifeblood of terror financing is volume over size. Crowdfunding – many people sending small amounts – has become a core tactic. Whether routed through ostensibly charitable appeals, coerced payments from NGOs operating in conflict zones, or direct social media campaigns, the model thrives on scale and resonance.

Women and family networks are central. In IS-linked communities, women coordinated fundraising, managed SIM cards to re-open shut social media channels, and cultivated online donor bases. This labor kept donation pipelines running even as formal accounts were closed and profiles banned.

Micro-donations matter operationally. Every euro reduces the need for the group to pay fighters and families from its own reserves. Even small amounts can fund basics: electricity, mobile top-ups, food, and – crucially – communications.

Terrorism is not only an ideological and kinetic threat; it is also a financial problem. Effective disruption of terrorist activity requires cutting the money flows that sustain recruitment, movement, logistics and operations. Investigations and trials in Germany – from arrests of alleged Islamic State supporters to the international case around a prominent fundraiser for Hamas – highlight the variety of techniques used to move funds, the practical obstacles investigators face, and how current law sometimes leaves prosecutors with weak tools.

Bastian Schwind-Wagner _Follow

"Cutting terrorist funding requires a mix of better laws, targeted enforcement and cooperation with financial and digital platforms. Focusing on traceable channels, closing regulatory loopholes in informal remittances, and improving real-time analytics will make prosecutions more effective and raise the cost of supporting extremist violence."

How money reaches conflict zones: multiple, adaptable channels

Terrorist groups exploit whatever transfer methods are available and hard to police. Traditional banking transfers remain in use where possible, but the money ecosystem employed is diverse.

Hawala networks continue to play a major role. Originating as a trust-based informal remittance system in many migrant communities, hawala (Havala) moves value without physical cross-border cash shipments. A sender in Germany deposits funds with a local agent who instructs a counterpart in the destination region to pay out an equivalent amount to the beneficiary. Transactions often leave minimal records, are conducted through informal fronts such as call shops, travel agencies or jewelry stores, and are frequently run without the official licensing required by financial supervisors. For investigators hawala is inherently opaque: operators typically purge records once payments are settled and rely on close personal relationships, making forensic reconstruction difficult.

Cash couriers and smuggling remain essential for larger sums and for areas where formal payment rails are absent. Money moving into camps or contested territories – for example northeastern Syria – often travels by hand across borders, carried by trusted couriers or hidden in supply lines. These operations are risky for smugglers but effective, especially where local cash transfer services do not operate.

Established money services are exploited where available, sending cash to intermediary locations (e.g., Turkey) from where local networks or couriers deliver it into the conflict zone. In camps with limited formal banking access, small-value remittances may be possible through local transfer offices under tight limits, but larger transfers require illicit routes.

Small donations scale: crowdfunding, social media and payment primitives

Crowdfunding-style small donations are a surprisingly potent resource. Many supporters donate modest sums repeatedly; these micro-contributions aggregate into meaningful budgets for fighters, families, or smuggling and procurement. Social media platforms and messaging apps become fundraising hubs: channels publish appeals, payment instructions, QR codes and crypto addresses, and coordinate fundraising campaigns that draw in numerous small donors.

Fintech features such as mobile banking, gift cards and prepaid instruments can facilitate transfers, too. Where traditional payment processors or banks apply compliance controls, fundraisers pivot to instruments with weaker oversight.

Cryptocurrencies: both risk and investigative opportunity

Cryptocurrencies have layered the risk landscape. Their borderless nature, low friction and pseudonymity make them attractive to actors seeking to evade traditional controls. Some groups still use widely known coins and public addresses, which can be traced on-chain; in those situations, blockchain analytics and real-time monitoring yield investigatory leads and sometimes enable rapid interdiction. Investigators have used these features successfully to follow flows and connect donors to operational channels.

However, privacy-focused coins and mixing techniques – and the use of privacy wallets or privacy-enhanced exchanges – increasingly hamper traceability. The shift to privacy coins removes the visibility that blockchain analytics depend on, making prosecution harder where chain-of-custody or destination attribution cannot be established.

The role of diaspora networks, families and women

Support networks are not limited to hardened operational cells. Diaspora communities and family ties are a critical component of funding channels. Relative transfers between family members, support for relatives in camps, educational support or payments framed as humanitarian assistance can mask ideological transfer intent. Courts often face difficult questions: was money sent as ordinary familial support, or did it reach a terrorist organisation?

Women have emerged as active fundraisers and logistic supporters in many theatres. While male fighters engage in kinetic roles, women frequently operate in the background – managing channels, collecting donations, running online outreach, or sustaining communication links. Their activity complicates detection because it can be framed as caregiving or charity.

Camps and local infrastructures: constrained transparency and ongoing radicalisation

Displacement camps such as Al-Hol concentrate families of foreign fighters and create both humanitarian pressures and security vulnerabilities. Limited distributions, tiny local purchasing power and tight official transfer limits mean larger sums must go through illegal routes. Camp economies, presence of transfer bureaux under local control, and smuggling of cash, phones and other supplies enable continued extremist activity and preservation of ideology. That perpetuates recruitment and provides the logistical base from which cells can reconstitute or export radicalised returnees to Europe.

Investigations and prosecutions: evidentiary thresholds and legal friction

German investigations into alleged fundraising and transfers have been intensive and resource-intensive. Yet prosecution faces structural evidentiary hurdles.

Under German penal law the offence of “supporting a terrorist organisation” (Section 129a and related provisions) often requires proof that funds actually reached the target organisation – a burden that is hard to meet when transfers traverse hawala chains, are carried by couriers, or are distributed within contested territories. While a separate offence of terrorism financing exists (Section 89c), it demands proof of the concrete criminal purpose for the funds (e.g., to commit murder, kidnapping, or other enumerated crimes). This requires linking even small sums to a planned or intended violent act – a high bar for prosecutors when donors claim charitable motives or the funding was aggregated and reallocated.

The result is relatively few terrorism-financing indictments compared to investigations. Statistics indicate numerous money-laundering or suspicious activity reports related to small-value fundraising, but a small fraction proceed to indictment for terrorism financing. Some defence lawyers have successfully argued that transfers were humanitarian, family support, or otherwise lacked the necessary nexus to violent activity.

Policy responses and legal proposals

Authorities and policymakers recognise the gap and have proposed changes. The German Justice Ministry has signalled intent to criminalise the attempt to transfer money to designated terrorist organisations, narrowing the gap where funds do not reach the group but the intent is clear. Other suggested reforms point to adopting broader standards similar to the US “material support” doctrine, which treats almost any assistance to a listed terrorist organisation as punishable regardless of its specific usage. Proposals to tighten digital-platform obligations under content and payments rules – for example imposing clearer duties on social media providers and payment intermediaries to flag suspected fundraising – would also help. Yet legal constraints in Europe on general monitoring and on free-expression balance mean careful legislative design is required.

Operational best practice and technological countermeasures

Despite legal limits, operational tools can increase disruption. Real-time blockchain monitoring, pattern detection of micro-donations across payment channels, and cooperation with fintech firms to surface suspicious QR-code or crypto fundraising are practical measures. Enhanced licensing and enforcement for informal money transfer operators, targeted outreach to migrant communities to encourage legal remittance channels, and cross-border law enforcement cooperation can reduce reliance on hawala and cash couriers. Improving intelligence sharing between platforms and prosecutors – with adequate safeguards for privacy and civil liberties – would shorten the time from detection to enforcement.

Lessons and the way forward

Terrorist financing is adaptive and uses a mix of low-visibility channels, micro-donations, diaspora ties and emerging technologies. Germany’s investigations show both successes and constraints: forensic tracing – especially in crypto cases where public ledgers are available – can produce breakthrough evidence, while hawala, cash smuggling and privacy coins frustrate prosecution.

Addressing the problem requires parallel tracks:

• better legal tools that lower evidentiary hurdles for attempts and broaden the scope of punishable assistance;
• stronger regulatory oversight of informal remittance services;
• enhanced cooperation with digital platforms and payment providers; and
• sustained operational investment in analytic tools that map small-value flows at scale.

Equally important is community engagement to reduce sympathetic fundraising impulses and improve reporting of suspicious solicitation.

Cutting off finance will never be a complete panacea – money can be moved by many means – but depriving extremist organisations of steady funding, making transfers riskier and more visible, and reducing the operational space for fundraisers are essential steps to lower the probability that networks can rebuild and export violence back to Germany and Europe.