A 16-year-old girl and a 20-year-old man have been arrested in Sydney on suspicion of financing the Islamic State (IS) terror group.

Key points: Police interested for some time in 20yo man linked to financing IS

Police interested for some time in 20yo man linked to financing IS Police working to raise awareness of the indicators of children being radicalised

Police working to raise awareness of the indicators of children being radicalised Specific amount of money sent overseas to allegedly fund IS not disclosed

Specific amount of money sent overseas to allegedly fund IS not disclosed AFP defends arrests in ongoing counter-terrorism efforts

The man, Milad Atai, has been charged with financing terrorism and did not appear in person at Parramatta Local Court.

His lawyer did not apply for bail on his behalf and it was formally refused and he is due to appear at Central Local Court on Wednesday.

NSW Police Deputy Commissioner Catherine Burn said it was a very serious charge.

"It carries a maximum imprisonment of 25 years," she told reporters.

"The 20-year-old man is somebody we have had an interest in for some time."

A police spokeswoman said the girl was still being questioned by police and no charges had been laid.

Deputy Commissioner Catherine Burn said counter-terrorism police had been investigating the man from the start of Operation Appleby but the girl was not somebody who was well known to police.

"We will be alleging, of course, that her involvement in a terrorism offence is an extremely serious matter and that will now be up for the courts to determine what happens next," she said.

She said police were trying to identify "all those things that might have been involved in her getting into this position".

The police were working to raise awareness of the indicators of children being radicalised, she said.

"There's an enormous amount of work currently going on with some compact programs that have been announced," she said.

She said the pair knew each other and were arrested together at Guildford in western Sydney.

Deputy Commissioner Burn said she would not be revealing the specific amount of money that had been sent overseas to allegedly fund the terror organisation nor how the money was raised.

She said the girl attended school but would not go into any details about her family.

Community help is 'extremely important'

Australian Federal Police (AFP) Deputy Commissioner Michael Phelan said reports from the community had been very important for the counter-terrorism operation.

NSW Police said the man and the schoolgirl knew each other and were arrested together. ( AAP: Mick Tsikas )

"Friends, relatives, peer groups, people that are aware of the activities or even slightly suspicious, it's important that those inquiries or those suspicions come to law enforcement or other people so that we can do something about it and try and stop things before they happen.

"We've taken proactive action on some charges so that it doesn't lead to something further on down the track."

When asked whether police had acted too soon in making arrests in Operation Appleby, because some people had later been released, he said police had been taking action as soon as there appeared to be a threat to the public.

"And if that means sometimes we have to take action early, we will do it," Deputy Commissioner Phelan said.

"And if it results in people being arrested and subsequently released, that's going to happen, but what that doesn't mean is that we've given up on those people."

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Deputy Commissioner Burn has previously described Operation Appleby as a complex, ongoing and long-standing investigation into alleged terrorism plots to conduct an attack in the state.

In January, Sameh Bayda, 18, of Guildford was also arrested by the same counter-terrorism team and charged with three counts of collecting documents likely to facilitate terrorist acts.

His wife, Alo-Bridget Namoa, 18, was arrested in relation to an ongoing investigation into terror-related activities and was allegedly found in possession of a knife.

There have been a series of police raids since the biggest counter-terrorism raids in Australia's history were carried out in September 2014.

Further raids have been carried out this year after police accountant Curtis Cheng was shot dead outside Parramatta police headquarters in October last year.

Police allege the group targeted in the raids may have been behind a series of terrorist plots, including the murder of Mr Cheng.