"Understanding how a terrorist or terrorist organisation raises, moves and uses its funds is critical to choking the funds and to disrupting their atrocities," Little said.
Each year, roughly $1.35 billion from the proceeds of fraud and illegal drugs is laundered through everyday New Zealand businesses, according to the Ministry of Justice.
The meeting is hosted by the Secretary of the US Treasury, Steven Mnuchin.
Each country will present on where they are at with the regulating of anti-money laundering and the financing of terrorism, as well as assessing what more needs to be done.
When it comes to anti-money laundering, Little said New Zealand was as prone to issues as any other country.
"We have a reasonably open system and it would be easy for funds to be tracked through New Zealand that are used for nefarious purposes."
He said New Zealand needed to be alert to this and Government regulations need to be up to speed to make sure New Zealand was not playing a role in criminal activities across borders.
The FATF was founded in 1989 on the initiative of the G7 to develop policies to combat money laundering.
After the September 11 terror attacks in 2001, the FATF's mandate expanded to include terrorism financing.
In 2017, the then National government passed the anti-Money Laundering and Countering Financing of Terrorism Act.
It extended the current anti-money laundering rules to cover more businesses, such as real estate agents and conveyancers, many lawyers and accountants, some businesses that deal in expensive goods and betting on sports and racing.
