By Ashreet Acharya
In May 2025, a terrorist attack in Indian-administered Jammu and Kashmir tragically claimed the lives of 26 civilians. This escalated military tensions between Indian and Pakistan and underscored the continuous and evolving challenge of terrorist financing under pressure. Directly responding to the attack, the Indian defence services launched targeted missile strikes against known Lashkar-e-Taiba (LeT) and Jaish-e-Mohammed (JeM) sites across the border, identifying these groups as the orchestrators behind the violence. These two Pakistan-based groups, connected to regional instability, have exploited financial networks to sustain their militancy. However, the most recent investigations reveal that their funding strategies have evolved, now combining traditional methods with modern digital tactics. This allowed them to survive and evolve during intense military, legal and technological scrutiny and hindrances. This analysis draws on open-source intelligence, financial transaction data, and policy reports to highlight the adaptive financial ecosystem that these groups navigate and to uncover how these groups maintain funding to operate through legal hindrances. It also sheds light on gaps in current countermeasures, offering recommendations for policymakers and corporations to collaborate in disrupting terror financing.
Hawala Networks: The Persistent Strategy
There is a long-standing effort to suppress the misuse of informal value transfer systems for terror financing; however, hawala remains an active method in South Asia. Hawala networks are informal trust-based financial systems that operate outside formal banking channels. Here, the value is transferred through a network of brokers communicating and settling debts through personal relationships and often without any official paper trails. In 2025, LeT and JeM exploit these trust-based networks in novel ways, rapidly evolving to dodge scrutiny by formal channels. Investigations have revealed that these groups change routes after each crackdown or military operation. They work with diaspora businesspeople to move manageable amounts across various channels, eluding flagging for bulk transactions and regulatory gates. This strategy of micro-transfer makes it more difficult to distinguish between legal and illegal flows than before, preventing regulators from relying solely on scale or pattern-based detection.
Charitable Fronts: Cloaked by Philanthropy
LeT and JeM have been associated with charitable organisations that are now decentralising their fundraising. Recent review points to an increase in the use of encrypted app-based micro-donations and not large festival-time fundraisers. These micro-donations are small but continuous transfers through anonymous platforms. This reduces the visibility of large financial flows; hence, the authorities have difficulty in linking donations to illicit activities due to their fragmented and low-value nature. Another tactic uses crowdsourcing through fragmented networks of “legal” social service initiatives. These initiatives operate under the guise of social welfare activities, which allows the groups to mix their illicit fundraising with genuine community aid, complicating law enforcement efforts to differentiate between lawful and unlawful fundraising. This hinders law enforcement from targeting a handful of high-profile institutions such as well-known charitable trusts, religious groups, and NGOs linked to militancy. These formal institutions are easier to monitor and freeze assets. However, the micro-threshold donation campaigns and decentralisation destabilise old-fashioned asset freezes, as shutting one front down causes three more to emerge elsewhere and often in plain sight by creating many small, less visible entities that quickly replace shut fronts.
Cryptocurrency & Crowdfunding: Digital and Illicit Finance
There is also a signficant change that can be seen here: the usage of privacy-oriented cryptocurrencies and decetnralised fintech platforms compared to earlier when traditional bulk cash movements and informal value transfer systems were more dominant. Since around the early 2020s, LeT and JeM have shifted to recruiting sympathisers for “peer-to-peer” micro donations over bulk movements via platforms that are often masked as humanitarian crowdfunding. The “donation chain” with transfer loops through multiple digital wallets before cashing out in local currency is an evasion tactic to dodge tracking methods, and this “fragmented” donation strategy also helps these groups evade AI-driven monitoring, as individual collections would not cross thresholds that would look suspicious and such collections accumulate across networks.
Innovation Under Pressure
The striking part after May 2025 is the combination of old and new strategies as a response to real-time military attacks and regulatory crackdowns. As the assets freeze, specifically targeting known bank accounts, real estate holdings, and financial resources connected to the group’s leadership and front organisations, fundraising shifts to digital wallets, and when those wallets are subsequently taken down, fundraising again pivots to community events and informal remittances. This adaptability shows how mid-tier members of the group operate and share best practices to avoid detection on encrypted messaging groups, essentially training new fundraisers to exploit the least governed system. These members manage day-to-day fundraising and financial operations. This connects leadership to the ground-level execution, and thus aids in rapid change of methods to dodge detection and sustain funding.
Hindering Intelligence & The New Blind Spots
The most crucial and underrated discovery is the fact that traditional intelligence models are losing traction due to the fragmentation and real-time swapping of strategies. In 2025, cross-border cryptocurrency flows and encrypted communications outpace law enforcement interception. This creates blind spots that hide large volume transfers through thousands of regular transfers. Hence, instead of focusing on massive busts, policing should disrupt patterns and platforms before scaling.
What Actually Works?
Legislators and policymakers must also rapidly adapt regulations and go beyond annual policy reviews. New pilot programs in blockchain forensics have addressed the extremist donation rings by tracking fragmented microtransactions successfully. Tech companies need to move forward from just account takedowns and invest in AI-powered anomaly detection to see the patterns across fragmented donations and wallet chains. Local agencies also must undergo capacity-building programs, including hands-on training with the latest forensic tools to close some of these new digital gaps.
Conclusion
What happened in 2025 put a spotlight on the continued persistence and evolution of LeT and JeM’s financing ecosystem, which rapidly integrated hawala with decentralised charity and digital micro-transactions. The new era of terror financing shows fragmentation, anonymisation and decentralisation as the major hindrances to detection and disruption. Nonetheless, continued research and capacity-building initiatives, along with real-time, tech-led and cross-border cooperative strategies, can potentially disrupt adaptive online financial networks.
Ashreet Acharya is a PhD candidate at Liverpool Hope University researching conspiracies and extremism. Holding two LLM degrees and qualified as an Indian Advocate, he contributes to academic discussions on security and legal issues.