According to the US Treasury Department, the extremist group calling itself the Islamic State (also known as ISIS or ISIL) is garnering wealth at an alarmingly quick pace, with large chunks coming from black-market oil sales and ransom payments for hostages.
ISIS earns about $US1 million each day in oil sales alone, said David Cohen, the Treasury Department’s under secretary for terrorism and financial intelligence. He also said the group has netted approximately $US20 million in ransom payments this year. Additionally, Cohen said ISIS has raised funds through local extortion and crime, like robbing banks.
“To some extent, ISIL poses a different terrorist financing challenge,” Cohen said during remarks at the Carnegie Endowment for International Peace in Washington on Thursday.
“It has amassed wealth at an unprecedented pace, and its revenue sources have a different composition from those of many other terrorist organisations. Unlike, for instance, core al-Qaeda, ISIL derives a relatively small share of its funds from deep-pocket donors, and thus does not, today, depend principally on moving money across international borders. Instead, ISIL obtains the vast majority of its revenues through local criminal and terrorist activities.”
Cohen heads the Treasury Department’s efforts to disrupt and diminish the group’s finances, which is part of President Barack Obama’s strategy to “degrade and ultimately destroy” ISIS. During his remarks, Cohen outlined what the Treasury Department knows about ISIS’ funds and the department’s strategy to undermine them.
ISIS has tapped into a sophisticated oil black market in both Syria and Iraq, selling it at discounted prices to middlemen who then transport it out of ISIS strongholds. Cohen also said the Syrian regime of President Bashar al-Assad has “made an arrangement to purchase oil” from ISIS. Beginning in mid-June, he said, ISIS has made approximately $US1 million a day in oil sales.
Cohen said the Treasury Department would target with sanctions anyone who deals with ISIS’ stolen oil.
“At some point, that oil is acquired by someone who operates in the legitimate economy and who makes use of the financial system. He has a bank account. His business may be financed, his trucks may be insured, his facilities may be licensed. All that makes ISIL oil facilitators vulnerable,” Cohen said.
He said the Treasury Department is “hard at work” identifying those individuals.
The US military has also begun targeting ISIS oil refineries in its campaign in Iraq and Syria.
On ransom payments, Cohen said the US would work to make it an international consensus for countries to not pay ransoms for hostages — something that has long been US policy.
“This policy rests on the sound premise — confirmed by experience — that an explicit and consistently applied no-concessions policy reduces the frequency of kidnappings by eliminating the underlying incentive to take hostages in the first place,” he said.
Business Insider Emails & Alerts
Site highlights each day to your inbox.