For AML compliance teams, the Counter-Terrorism Act introduces an extra layer of responsibility. While traditional AML measures focus on criminal proceeds, counter-terrorism compliance requires a different approach. Terrorist financing often involves small, regular transactions designed to avoid detection, rather than large, suspicious movements of money.

Teams must refine their monitoring systems to flag not only high-value transactions but also patterns that suggest structuring, rapid movement between accounts, or links to high-risk jurisdictions. Automated systems should be calibrated to detect transactions that may seem ordinary in isolation but are suspicious when viewed collectively.

Standard Know Your Customer (KYC) checks are no longer enough. Compliance teams must take a risk-based approach, applying enhanced due diligence to customers and entities flagged in terrorism-related watchlists. This includes screening against global sanctions lists and politically exposed persons (PEP) databases.

Third-party relationships pose another challenge. Businesses must assess the risk associated with suppliers, partners, and even charities they support. A company making a routine donation to an international aid organisation must be confident that funds will not be diverted to sanctioned groups.

Regulators are increasing their scrutiny of how businesses handle counter-terrorism compliance. Firms can expect more frequent audits, with regulators assessing not just policies on paper but their practical implementation. Businesses that cannot demonstrate a proactive approach risk heavy penalties.