Fraud, crowdfunding, and war: navigating AML/CFT risks

A new era of scrutiny

As Europe enters the implementation phase of its ambitious AML/CFT reform agenda, compliance professionals must adapt to a new regulatory landscape which includes conflict-driven financial flows, digitally enabled fraud, and the growing use of crowdfunding to finance both humanitarian efforts and, in some cases, illicit activity.

The global resurgence of armed conflict—from Eastern Europe to the Middle East—has significantly reshaped financial flows and compliance exposure across Europe. The expansion of crowdfunding, often used to mobilize donations for humanitarian or military support, poses acute challenges for Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) professionals.

Crowdfunding: Now a fully regulated sector

The EU AML Package, comprising Regulation (EU) 2024/1624 (AMLR), Directive (EU) 2024/1640 (the new AML Directive), and Regulation (EU) 2024/1620 (AMLA Regulation), officially entered into force in June 2024. This comprehensive update closes a longstanding regulatory gap and marks a significant compliance turning point.

While certain provisions, such as those establishing the European Anti-Money Laundering Authority (AMLA), apply from July 1, 2025, the core AML/CFT obligations under the AMLR will become fully applicable by July 10, 2027. Member States are also required to transpose the new AML Directive into national law by the same date.

Under this expanded framework, the following types of crowdfunding service providers (CSPs) are now definitively covered:

• Donation-based platforms, often used in humanitarian or emergency appeals.
• Reward-based models, where donors receive symbolic goods or services.
• Equity and lending crowdfunding, already partially regulated under EU investment frameworks.

This expansion aims to ensure that regardless of the specific crowdfunding model, all platforms handling funds are subject to robust AML/CFT measures, including:

• Customer Due Diligence (CDD): Identifying and verifying the identity of both project owners and funders.
• Beneficial Ownership Transparency: Determining who ultimately owns or controls the entities involved.
• Risk Assessment: Implementing systems to assess and manage money laundering and terrorist financing risks.
• Reporting Obligations: Reporting suspicious transactions to financial intelligence units (FIUs).
• Internal Policies and Controls: Establishing robust internal procedures and controls to mitigate related risks.

Platforms need to build or upgrade internal AML/CFT programs, even if their business models were previously exempt.

Fraud and abuse in conflict-linked crowdfunding

Recent conflicts—from Ukraine to Gaza—have demonstrated how rapidly crowdfunding can be misused to:

• Solicit illicit donations under the guise of medical or humanitarian aid.
• Finance military goods or dual-use equipment (e.g., drones, tactical gear).
• Circumvent formal financial controls via cryptocurrency or peer-to-peer networks.

European financial intelligence units (FIUs) and other anti-money laundering and counter-terrorism financing (AML/CFT) authorities have increasingly identified and warned against the heightened risk of humanitarian appeals being exploited by illicit actors, including those linked to sanctioned individuals or terrorist organizations. These concerns stem from observed trends in financial crime, particularly during periods of crisis and increased humanitarian need.

Sanctions, humanitarian aid, and compliance dilemmas

The rapidly evolving landscape of conflict-related fundraising presents significant and complex challenges for anti-money laundering (AML) and counter-terrorism financing (CFT) compliance teams within financial institutions. These challenges stem from several critical areas:

• Sanctions Evasion Risks in Humanitarian Contexts: Compliance teams face a delicate balance as sanctions regimes often prohibit financial transactions with certain regions, entities, or individuals, even when funds are ostensibly intended for humanitarian aid. This creates a high risk of sanctions circumvention, where illicit actors may exploit legitimate humanitarian appeals to transfer funds to sanctioned parties or territories.
• Dual-Use Technology Diversion: The proliferation of readily available commercial technologies with potential "dual-use" applications (i.e., serving both civilian and military purposes, such as drones or encrypted communication devices) complicates due diligence. Screening at scale to prevent the diversion of such technologies from humanitarian efforts to battlefield use poses a significant and intricate challenge for compliance frameworks.
• Ambiguous Language and Intent: Financial transactions associated with conflict zones can involve ambiguous or emotionally charged language, such as "support the resistance" or "aid to the front." Such terminology necessitates highly nuanced interpretation by compliance teams to distinguish between legitimate support for affected populations and potential illicit financing for non-state armed groups or terrorist organizations.

Recognizing these complexities and the critical need to ensure that AML/CFT measures do not inadvertently impede vital assistance, the Financial Action Task Force (FATF), the global standard-setter for AML/CFT, has consistently emphasized the importance of a risk-based approach.

What compliance teams should do

With risk exposure growing, regulated firms—including payment processors, crowdfunding platforms, and banks—should take proactive steps to ensure compliance and manage reputational risk:

1. Enhance screening logic:

• Use keyword filters to detect campaign language tied to conflict, militarisation, or sanctioned areas.
• Include crowd-sourced red flags and social media analysis tools.

2. Establish escalation protocols:

• Route borderline cases to cross-functional teams (compliance, legal, ethics).
• Maintain an internal registry of previously flagged crowdfunding campaigns.

3. Review and classify beneficiaries:

• Implement tiered due diligence based on the nature of the campaign and its stated purpose.
• Use IP geolocation and blockchain analytics for crypto campaigns.

4. Engage with FIUs:

• Seek guidance on complex campaign assessments.
• Share typologies and anonymized case studies to improve sector-wide knowledge.

Looking ahead: AMLA and supervisory consistency

With the creation of the European Anti-Money Laundering Authority (AMLA) under Regulation 2024/1620, which began its main operations on July 1, 2025, a new era of supervisory consistency is expected. AMLA will oversee high-risk entities directly and ensure national supervisors apply the AMLR uniformly across Member States.

In this environment, platforms that proactively adapt to the AMLR’s standards are likely to gain a reputational and operational advantage.

Crowdfunding in a high-risk world

As of July 2025, the AML/CFT landscape in Europe is more comprehensive, complex, and consequential than ever. The integration of crowdfunding into the EU’s AML regime is both timely and necessary, given its increasing use in high-risk, fast-moving contexts.

Compliance officers must now blend traditional risk controls with emerging technologies, geopolitical awareness, and ethical sensitivity. In a time when financial flows can fuel both relief and conflict, the role of compliance is not just regulatory—it is moral and strategic.

Further reading and references

• EU AML Package Summary – European Commission
• Regulation (EU) 2024/1624 (AMLR)
• Regulation (EU) 2024/1620 (AMLA Regulation)
• Directive (EU) 2024/1640 (New AML Directive)
• FATF: Humanitarian Action and AML/CFT Measures (e.g., FATF Annual Report 2023- 2024, and updated Recommendation 8 guidance)
• Europol: EU Terrorism Situation and Trend Report (TE-SAT) 2025
• United Nations Security Council Resolution 2761 (2024)
• Reuters: Lithuania Drone Crowdfunding (2022)