Financial Crime World

ISIL’s Finances: A Sophisticated Extortion Racket

The Complex Web of Funding Streams

A recent report by the Financial Action Task Force (FATF) has shed light on the financial structure of the Islamic State in Iraq and the Levant (ISIL), revealing a complex web of funding streams and illicit activities.

Sources of Income

According to FATF, ISIL’s top-level leadership structure is hierarchical and replicates itself at the provincial level. The organization generates revenue from five main sources:

  • Illegal Proceeds from Occupation of Territory: ISIL controls territory and generates income through extortion and theft.
  • Kidnapping for Ransom: The group kidnaps individuals and demands ransom payments.
  • Donations: ISIL receives donations from sympathizers and supporters.
  • Material Support: The organization receives material support, such as weapons and equipment.
  • Fundraising through Modern Communication Networks: ISIL uses modern communication networks to raise funds.

Extortion Racket

ISIL’s most significant source of income comes from extortion and theft in areas under its control. The group has established a sophisticated extortion racket, robbing and looting economic resources, including:

  • Banks
  • Natural Resources
  • Agriculture
  • Historic Sites

ISIL’s wealth is derived from both non-monetary assets and physical cash, with the organization providing receipts for levies paid to demonstrate a degree of sophistication.

Control over Bank Branches

The report also highlights ISIL’s control over bank branches in Iraq, where it has generated or had access to at least $500 million in cash. The group treats state-owned banks differently, taking control of the cash while taxing private banks upon customer withdrawals.

International Efforts to Combat Financing

In response to the FATF report, international organizations and governments have condemned ISIL’s illicit activities and called for robust implementation of anti-money laundering standards to disrupt and prevent financing.

  • United Nations Security Council (UNSC): The UNSC has imposed sanctions on ISIL, identifying funding streams including revenues from oil fields and infrastructure, kidnapping for ransom, private donations, fundraising through the internet, and possible sanctions evasion.
  • Manama Meeting on Combating the Financing of Terrorism: In November 2014, the Kingdom of Bahrain hosted the Manama Meeting on Combating the Financing of Terrorism, where participating countries demonstrated their commitment to fighting terrorism. The meeting’s closing declaration emphasized the need for full implementation of anti-money laundering standards and active participation in international efforts to combat terrorist financing.

Conclusion

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ISIL’s finances are built on a foundation of extortion, theft, and illicit activities, with the group generating significant wealth from its control over territory. International organizations and governments must continue to work together to disrupt and prevent these funding streams, while also addressing the root causes of extremism and promoting economic stability in regions affected by terrorism.

Source:

  • FATF Report
  • United Nations Security Council Resolution 2170 (2014)
  • Kingdom of Bahrain Ministry of Foreign Affairs (2014)