The Islamic State terror group made nearly $1 billion in total revenue last year, half of which came from the sale of oil, and earned as much $350 million per year by extorting funds from the local population, a top US Treasury Department official has said.
ISIL’s sources of income include oil and gas sales, extortion and taxation, external donations, kidnapping-for-ransom and previously bank looting, Daniel Glaser, the Treasury’s assistant secretary for terrorist financing said.
“We estimate that in 2015, ISIL made approximately $1 billion dollars in total revenue, $500 million of which came from the sale of oil, primarily through populations under its control,” Glaser said, using the US’s preferred acronym for Islamic State.
“We also estimate that ISIL may have earned as much $350 million per year, by extorting funds from the local population and in connection with the financial and commercial activity taking place in the territory it controls,” he said yesterday in written testimony for a House of Representatives committee hearing on security threats.
ISIL also gained considerable funds from seizing control of state-owned banks in northern and western Iraq in 2014 and early 2015, he told the lawmakers.
“These funds from the bank vaults were estimated to be at least half a billion dollars at the time of capture, making them an important, albeit non-renewable, source of financing for ISIL in its earlier days,” Glaser said.
Other less significant sources of revenue include kidnapping-for-ransom (KFR).
“We estimated that ISIL earned between $20 and $45 million from KFR in 2014. However, we assess revenue from KFR declined substantially in 2015 and 2016 owing to the greatly reduced presence of potential Western hostages in or near the territories it controls,” he said.
The senior official said the ISIL clearly has vast financial resources, but the Obama administration has seen indications that America’s efforts to disrupt ISIL’s sources of revenue are bearing fruit.
Through air strikes, the coalition has directly targeted ISIL’s entire oil and natural gas supply chain: from oil fields, to refineries, to tanker trucks, targeting ISIL’s primary source of revenue, he claimed.
“While difficult to quantify, the strikes have undoubtedly impeded ISIL’s ability to produce, sell, and profit from oil as it had been doing,” he said.
Glaser also said that recent Coalition strikes have also reduced the levels of cash in ISIL-controlled territory.
US-led Coalition airstrikes have targeted ISIL’s cash storage sites, destroying tens of millions, and possibly more than 100 million dollars, and eliminated senior ISIL officials, including the group’s de facto finance minister.
For the first time since it proclaimed its caliphate in June 2014, the Islamic State has come under financial pressure following a sharp drop in oil production in territories it controls among other measures, a recent UN report had said.
The Treasury Department official said the US has also worked closely with the Iraqi Government to reduce liquidity in ISIL-held areas.
“One of the most important steps taken by the Iraqi government was its decision in August 2015 to ban the distribution of government salaries into ISIL-held areas, thereby eliminating ISIL’s ability to tax these funds,” Glaser said.
“As a result of these efforts, ISIL is struggling to pay its fighters and we have seen a number of ISIL fighters leaving the battlefield as their pay and benefits have been cut and delayed,” he claimed.
As of February 2016, ISIL had also begun levying taxes on the poorest civilians, who had previously been exempt from taxation, he said.
“When we see indications that ISIL cannot pay the salaries of its own fighters and is trying to make up for lost revenue elsewhere, we know we are hitting them where it hurts,” the official told lawmakers.
Glaser said denying ISIL access to the international financial system represents the second prong of America’s strategy to counter its financing.
The first step is working to deny ISIL access to the Iraqi financial system. Shortly after the fall of Mosul, we worked closely with Iraqi authorities to ensure that approximately 90 bank branches within ISIL-controlled territory in Iraq were and remain cut off from the Iraqi and international financial system.
ISIL likely uses certain exchange houses as important points of access to the financial system. In response, the Central Bank of Iraq (CBI) has identified and developed a dynamic list of over 100 ISIL-related exchange houses that are prohibited from accessing the CBI currency auction in Iraq.
The list has been published on the CBI’s website and shared with regional governments to enable them to take steps to prevent these banned exchange houses from accessing their respective financial systems.
The US has sanctioned approximately 60 ISIL-linked senior leaders, financiers, foreign terrorist facilitators, and ISIL branches, effectively shutting them out of the US financial system. the UN has also sanctioned key ISIL facilitators.
Glaser said that the challenge of countering ISIL’s finances is not an impossible one.
“ISIL, like any terrorist organisation, needs money to survive and diverse efforts are underway to deprive ISIL of its resources and deny it access to the international financial system,” he said. — PTI
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