Stronger powers to cut off funding for terrorists by freezing their assets and blocking access to bank accounts will form part of the Government's plans to introduce the UK's own post-Brexit sanctions regime.
Britain currently negotiates and imposes non-United Nations international sanctions through European Union laws.
The Government will introduce a Sanctions Bill to ensure it has the legal powers to bring forward restrictions on foreign countries after the UK's withdrawal from the EU.
It will include additional powers to ensure ministers can freeze terrorists' assets more easily.
To do so at the moment the Government must "reasonably believe" a person is, or has been, involved in terrorism and that freezing their assets is necessary to protect the public.
Under the new plans, ministers would only need to have "reasonable grounds" to suspect a person or group is, or has been, involved in terrorism and that sanctions are an "appropriate action".
Economic Secretary to the Treasury Stephen Barclay said: "These new powers will help us keep the British public safer from terrorist attacks by keeping money out of the hands of those wishing to cause us harm.
"Our counter terrorist financing proposals will make it easier for law enforcement and Government to impose sanctions on those that present a threat to our national or international security."
The Sanctions Bill, one of eight Brexit-related pieces of legislation to be brought forward over the next two years, will be designed to give the UK greater flexibility on when and how to introduce new measures.
At the moment, the UK implements more than 30 sanctions regimes, including against countries like Russia, North Korea and Iran as well as terror groups such as Islamic State and al Qaida.
The Bill will repatriate powers on non-UN sanctions from Brussels and build on them, introduce an annual review of sanctions regimes to ensure they remain appropriate, give individuals and organisations the opportunity to challenge measures imposed on them, and enable exemptions when required, for example to deliver humanitarian aid to regions hit by sanctions.
Europe minister Sir Alan Duncan said: "The new Sanctions Bill will ensure that when the UK leaves the European Union, we retain the ability to impose, update and lift sanctions regimes, both to comply with our international obligations and in pursuit of our foreign policy and national security objectives.
"This will enable us to impose sanctions as appropriate either alone or with partners in the EU and around the world, to take targeted action against countries, organisations and individuals who contravene international law, commit or finance terrorism or threaten international peace and security."