Executive Intelligence Snapshot
Despite recent institutional hardening and 2025 legislative reforms, Russia’s financial intelligence apparatus faces severe challenges in countering terrorism financing because of adversaries increasingly exploiting decentralised cryptocurrencies and digital payment platforms.
This systemic risk is acute, as exposed by the 2024 Crocus City Hall assault, which highlighted critical vulnerabilities in tracking non-traditional, transnational illicit financial flows.
Furthermore, the efficacy of Russia’s counter-terrorist financing regime is highly likely to degrade further as Western sanctions and geopolitical friction restrict vital cross-border intelligence sharing, leaving the state vulnerable to digitally native threat actors.
Context
Russia’s approach to countering terrorist financing (CTF) is rooted in its broader anti-money laundering and counter-terrorist financing (AML/CFT) framework, established under Federal Law No. 115-FZ “On Counteracting the Legalization (Laundering) of Criminally Obtained Income and the Financing of Terrorism” in 2001. The law requires financial institutions to identify customers, monitor and report suspicious transactions, and freeze assets linked to individuals and organisations designated for terrorism or extremist activities. The framework reflects the international standards developed by the Financial Action Task Force (FATF). However, in February 2023, FATF suspended the Russian Federation’s membership.
The central coordinating body is the Federal Financial Monitoring Service (Rosfinmonitoring), Russia’s financial intelligence unit, which collects and analyses financial intelligence, maintains the national register of individuals and organisations associated with terrorism and extremism, coordinates interagency efforts, and supports law enforcement investigations. Inclusion on the register results in the freezing of financial assets and significant restrictions on access to the financial system. Since the establishment of the National Anti-Terrorism Committee (NAC), Rosfinmonitoring has played a central role in Russia’s interagency counter-terrorism system.
The Crocus City Hall terrorist attack on 22 March 2024, claimed by the Islamic State Khorasan Province (ISKP), renewed attention to the evolving methods of terrorist financing. According to the FATF, at least part of the attack was financed through virtual assets transferred via Islamic State-linked entities, highlighting the growing use of cryptocurrencies and cross-border financial channels by terrorist organizations. The subsequent investigation included efforts to identify the attack’s financial facilitators, resulting in multiple arrests on charges related to terrorist financing.
After the attack, on 29 May 2024, the Bank of Russia established the Financial Monitoring and Foreign Exchange Control Service, centralizing supervisory functions over credit and non-bank financial institutions in the areas of AML/CFT compliance and foreign exchange control to improve the efficiency of financial supervision. Although the Bank of Russia did not explicitly link this institutional reform to the Crocus City Hall attack, the reorganisation reflects Moscow’s broader effort to enhance financial oversight, improve coordination among supervisory authorities, and strengthen the detection of illicit financial activity associated with terrorism and similar threats.
Russia has continued to strengthen its legal framework in response to evolving terrorist financing risks.
In December 2025, the State Duma adopted amendments to Federal Law No. 115-FZ and related legislation, expanding the grounds for designating terrorist and extremist actors, introducing administrative liability for failing to implement freezing measures, and strengthening the implementation of targeted financial sanctions.
Despite these reforms, a day later, on 3 December 2025 the European Commission designated Russia as a high-risk country with strategic deficiencies in its AML/CFT framework, requiring enhanced due diligence for financial transactions involving Russian entities within the European Union.
Why Does It Matter?
Countering terrorist financing is essential to preventing terrorist organisations from planning, recruiting, and carrying out attacks. Russia’s ability to identify and disrupt terrorist financing is critical to preventing attacks, protecting critical infrastructure, and limiting the operational capabilities of both domestic and transnational terrorist organizations. As terrorist groups increasingly use cryptocurrencies, digital payment systems, and cross-border financial networks to move funds, an effective AML/CFT framework is critical for detecting and disrupting these activities.
Russia’s counter-terrorist financing system also has international importance. Its ability to comply with global AML/CFT standards affects cooperation with foreign partners, financial institutions, and international organizations in combating terrorism and financial crime. At the same time, sanctions, reduced international cooperation since 2022, and evolving financing methods continue to create challenges for the effectiveness of Russia’s CTF regime.
The European Commission’s decision to designate Russia as a high-risk country in 2025 further highlights international concerns about weaknesses in the country’s AML/CFT framework, making it important to assess how effectively Russia identifies and disrupts terrorist financing.
Outlook
In the short term (6–12 months) Russia is likely to continue strengthening domestic efforts to counter terrorist financing by enhancing financial intelligence, increasing oversight of digital payment methods and virtual assets, and implementing the legislative amendments adopted in 2025. Internationally, Moscow is expected to deepen cooperation with its key regional partners.
The recent 14th India–Russia Joint Working Group on Counter Terrorism reaffirmed both countries’ commitment to expand cooperation against terrorism and specifically terrorist financing, including greater coordination through the UN, BRICS, and the Shanghai Cooperation Organization (SCO), as well as enhanced information sharing on terrorist financing networks.
At the same time, Russia is also likely to expand counterterrorism engagement with Pakistan, particularly in addressing threats emanating from Afghanistan and Central Asia discussed also at the twelfth round of the Pakistan-Russia Joint Working Group to Counter International Terrorism, held in Islamabad on 23 June 2026. Growing dialogue between Moscow and Islamabad suggests increasing cooperation on intelligence sharing, regional security, and disrupting transnational terrorist networks, although practical cooperation is likely to remain cautious given broader geopolitical sensitivities.
Over the medium term (1–3 years), Russia is likely to continue adapting its AML/CFT framework to address evolving terrorist financing methods, particularly the use of cryptocurrencies, digital payment platforms, and other emerging financial technologies. International cooperation is expected to remain selective, with Russia placing greater emphasis on bilateral partnerships and regional organizations such as BRICS, the Shanghai Cooperation Organization (SCO), and the Eurasian Group (EAG). However, the effectiveness of these efforts may be constrained by sanctions, reduced cooperation with some Western financial intelligence units, and the increasing sophistication of transnational terrorist financing networks.
In the long term (beyond 3 years), Russia’s ability to effectively counter terrorist financing will depend on its capacity to keep pace with emerging financial technologies, ability to improve the detection of complex cross-border financial flows and maintain international cooperation in current circumstances. Although collaboration with Western partners is likely to remain limited, Russia is expected to deepen cooperation with non-Western states through bilateral agreements and multilateral forums. While Russia maintains developing its legal framework and financial intelligence, its future largely involves managing these risks independently or bilaterally with allied states rather than participating in unified global enforcement networks.
