What's funny about this is that multiple people at this bank think that a terrorist group would just freely advertise itself this way. Like some local cell leader names his accounts "Groceries", "Home Repair", "Bombing Supplies"
You might see dumb things because banks will do anything they can think of to ensure they comply, and enough in the eyes of the regulator is that they don't allow banned transactions.
Yes, you're meant to do KYC checks, but also be on the look out for things that your non-sanctioned customers might be doing (post KYC checks) that involves interacting with Sanctioned entities.
Hence lots of pattern matching on names of sanctioned countries/organisations/people.
Still, actual terror group would do it the same way intelligence agencies call their division 'room 10' as a code for something else. As a species, we certainly are a little weird.