FATF ¦ IO10 TF Pre­vent­ive Meas­ures & Fi­nan­cial Sanc­tions

Immediate Outcome 10: Preventing Terrorists and Terrorist Financiers from Raising, Moving and Using Funds

Understanding and disrupting terrorist financing is central to reducing the risk of terrorist acts. Immediate Outcome 10 (IO10) of the FATF effectiveness assessment framework measures how well a country identifies terrorists, terrorist organisations and their financiers and deprives them of the resources and means to raise, move and use funds. IO10 combines targeted financial sanctions, risk-based measures for non-profit organisations (NPOs), law enforcement and supervisory action, and international cooperation. The objective is not only legal compliance but tangible reduction of terrorist financing flows through timely and proportionate measures.

What effective implementation of IO10 looks like

An effective system under IO10 consistently identifies terrorist financiers and their networks, freezes and prevents the use of assets subject to designation, and applies risk‑based mitigation where funds might be raised or moved. This includes prompt implementation of United Nations Security Council (UNSC) targeted financial sanctions regimes (notably those arising from UNSCR 1267 and successor resolutions, and UNSCR 1373) as well as national or supra‑national regimes. Authorities must combine freezing and asset tracing with investigative measures that lead to seizure, prosecution or other measures that remove the capacity to finance terrorism.

Equally important is a calibrated approach to NPOs. Countries should understand the TF risks facing organisations in the domestic context and apply focused, proportionate, risk‑based measures so that legitimate humanitarian and civil society activities are not unduly disrupted or discouraged. Financial institutions, designated non‑financial businesses and professions (DNFBPs) and virtual asset service providers (VASPs) must understand and comply with obligations relating to targeted financial sanctions and TF risk mitigation; supervisors should monitor and enforce compliance through outreach, guidance and, where necessary, proportionate sanctions.

Core questions that shape assessments

IO10 assessment revolves around a set of core issues that capture both action and outcomes. Key questions include whether targeted financial sanctions under UNSCR 1267 (and successors) and UNSCR 1373 are implemented without delay; the extent to which funds and assets of terrorists, designated persons and those acting on their behalf are identified and prevented from being raised, moved or used; how effectively the country applies risk‑based measures to NPOs without undue disruption; and how well regulated sectors and supervisors understand and enforce targeted sanctions obligations.

Assessors look for evidence across legal, operational and supervisory dimensions: designation and asset freeze statistics and timeliness; results of investigations, freezes, seizures and prosecutions; outreach and supervision of NPOs and regulated sectors; and indicators that TF flows have been disrupted (for example, intelligence showing reduced fundraising success or shifts by terrorist groups to alternative methods).

Bastian Schwind-Wagner _Follow

"Terrorist financing is disrupted when timely targeted financial sanctions, focused investigations, and proportionate oversight of at‑risk organisations work together. Coordinated action by law enforcement, financial intelligence units, supervisors and NPO regulators is essential to prevent funds from being raised, moved or used for terrorist purposes.

To strengthen outcomes, countries need clear procedures for rapid designation and asset freezes, well‑resourced financial investigation capacity, and risk‑based engagement with NPOs and regulated sectors. Effective supervision, outreach and international cooperation close gaps that otherwise allow terrorist financiers to exploit cross‑border channels."

Key elements and practical measures

Timely implementation of targeted financial sanctions. A robust IO10 outcome requires clear procedures for identifying targets for designation, freezing and unfreezing assets, de‑listing and granting authorized use exemptions where UNSCRs permit. Mechanisms must ensure designations and asset freeze orders are promptly communicated to financial institutions, DNFBPs, VASPs and the public as appropriate. Effective use of UNSCR tools — such as listing, delisting and exemptions — should be supported by a legal and operational framework that minimizes delay between designation and asset control.

Investigations, asset tracing and complementary measures. Freezes and sanctions are necessary but insufficient on their own. Authorities should employ financial investigations, provisional measures (freezing and seizure), mutual legal assistance and prosecution when appropriate to convert intelligence and suspicions into concrete interruptions of fundraising and transactional capacity. Asset tracing and follow‑the‑money techniques that lead to disruption of networks and seizure of resources strengthen IO10 outcomes.

Risk‑based approach to NPOs. Countries must identify which NPOs are at risk of TF abuse and deploy four core elements for those not assessed as low risk: sustained outreach to NPOs, targeted risk‑based oversight or monitoring, effective investigation and information gathering, and strong international cooperation. For NPOs assessed as low risk, outreach proportional to that low risk is the appropriate approach. The aim is targeted mitigation that preserves legitimate charitable activity while closing avenues for misuse.

Supervision, compliance and sectoral understanding. Financial institutions, DNFBPs and VASPs need clear obligations, guidance and training on targeted financial sanctions and TF risk indicators. Supervisors and regulators must have tools to monitor compliance, conduct risk‑based examinations, provide outreach and apply remedial measures or sanctions that are effective, proportionate and dissuasive. Evidence of compliance activity includes the number and quality of suspicious activity reports, rejections of transactions linked to sanctioned persons, and supervisory enforcement outcomes.

Resourcing and coordination. The effectiveness of IO10 depends on competent authorities — law enforcement, financial intelligence units, counter‑terrorism agencies, supervisors and NPO regulators — having adequate resources and coordination mechanisms. Where resources are shared across functions, prioritisation of TF‑related activities should be clear. International cooperation and information sharing are especially important given the cross‑border nature of terrorist financing.

Indicators of effective outcomes

Assessors and practitioners look for tangible indicators that the TF environment has been disrupted: measurable reductions in successful fundraising by terrorist groups, demonstrable difficulties for terrorists to transfer funds, timely and sustained asset freezes, effective use of designations and de‑listings in line with UNSCRs, prosecutions or administrative measures that deter TF activity, and evidence that NPOs understand TF risks and have implemented protective measures. Supervisory statistics showing outreach, inspections, and sanctions in relation to targeted financial sanctions obligations further support a positive IO10 finding.

Common challenges and areas needing attention

Challenges that weaken IO10 results include delays in implementing UNSC designations and asset freezes; insufficient or poorly targeted oversight of at‑risk NPOs; limited capacity for complex financial investigations and asset tracing; inadequate understanding of TF typologies among regulated sectors; and weak supervisory enforcement. Another frequent gap is limited international cooperation or slow mutual legal assistance that hinders tracing cross‑border flows. Addressing these areas means strengthening procedures for rapid designation and freeze, investing in financial investigation capabilities, tailoring outreach to NPO risk profiles, and ensuring supervisors are equipped to enforce compliance.

Conclusion

Immediate Outcome 10 measures whether a country not only has laws on the books but achieves concrete reductions in the ability of terrorists and their supporters to access and use financial resources. Effective IO10 implementation rests on a combination of prompt targeted financial sanctions, intelligent financial investigations and asset tracing, risk‑based oversight of NPOs, well‑resourced and coordinated competent authorities, and strong supervisory and compliance frameworks covering financial institutions, DNFBPs and VASPs. When these elements work in concert — timely designation and freezing, proportionate NPO measures, effective supervision and cross‑border cooperation — countries significantly reduce terrorist financing flows and the associated risk of terrorist activity.

Dive deeper

• FATF ¦ The FATF Recommendations ¦ Link
• FATF ¦ Luxembourg’s measures to combat money laundering and terrorist financing ¦ Link