Money allegedly intended for the Islamic State terrorist group was found by the mother of a rollover witness as she went to wash his clothes, a Sydney court has heard.

Oarjan Azari and Ali Al-Talebi are accused of making $6,000 available to the Islamic State group in two separate money transfers last year.

It is alleged they used the witness giving evidence against them to do the transfers through Western Union outlets at Parramatta and Auburn.

He was referred to as a rollover witness in court because he had previously worked with the men and was now testifying against them. He will not face prosecution.

A committal hearing was told this man, who cannot be identified, tried to make a third transfer of $US9,000, but pulled out because he was unsure about fees that were to be charged.

The court heard the money was later found by his mother in the pocket of his shorts.

"Laundering money," Magistrate Peter Miszalski said.

Prosecutor Peter Neil SC responded: "Almost literally."

The court heard the witness was younger than Azari and Al-Talebi, and was under their influence.

Mr Neil said the purpose of the transfers was "to end up supporting Islamic State activities in Syria and Iraq".

Up to 7,000 pages of secretly recorded telephone conversations were tendered as evidence to the court.

Appearing for Azari, barrister Steven Boland said there was no evidence the funds were "ever received by any terrorist organisation".

He said there was a lot of evidence suggesting the opposite.

The prosecution said this was irrelevant.

"Whether they got their hands on it or not is another question," Mr Neil said.

The witness is due to give evidence at the hearing on Wednesday.