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ISIS financing: setbacks and new sources of incomes

Updated: May 18, 2018

UN Member states are fighting and disrupting ISIS flow of money. Which steps have been taken?

ISIS is losing incomes and weakening the terrorist group. How is current situation and are there new ways of funding the terrorist’s activities?

ISIS continues to rely chiefly on the same two revenue streams: hydrocarbons and extortion/taxation, which it has depended on since its declaration of the so-called “Caliphate”. ISIS still manages income of tens of millions of dollars per month. Given this reliance on territoriality derived sources of income, as the group continues to lose territory, and in particular population centres, its sources of income will continue to decline.

Now in 2018, ISIS does not appear to have developed new sources of income that could compensate for the continuing loss of its two main revenue streams. However, it does not necessarily need to offset the large losses; for as ISIS loses population centres and its forces continue to dwindle, it will also have substantially fewer costs. Thus ISIS may be able to stretch further any funds that it retains or obtains going forward.

Given this drastic decrease of incomes which are the new sources exploded?

ISIS had made as much as $500 million from oil and oil products in 2015 (UN S/2016/92). According to an estimate by the United Nations Assistance Mission for Iraq, that income had decreased by approximately 50 per cent in large part owing to military operations targeting oil-related infrastructure. ISIS has tried to offset the decrease in hydrocarbon revenues by increasing the “tax” burden upon the population still under its control (S/2016/629), and this effort continues on the same line. In addition to the aforementioned resources, ISIS has drawn income from antiquities smuggling, agricultural products, sale of electricity, exploitation of mineral resources such as phosphates and sulfuric acid, external donations, kidnapping for ransom and human trafficking. But the unstable financial decline of ISIS is also shown in significant reductions and delays in fighters’ salaries, internal corruption and theft, and a decrease in the already minimal services that ISIS was providing.

UN member states have been implementing UN measure to counter financing, what can we expect of those measures?

UN member states implemented the Security Council resolution 2253 (2015) (S/2016/501) and made substantial progress in implementing the counter-financing of terrorism requirements of the relevant Council resolutions. On the other hand, the Financial Action Task Force revised the interpretive note to its recommendation on the criminalization of terrorism financing to include financing the travel of foreign terrorist fighters.

20 States in Europe and the Caucasus have taken steps to introduce legal measures specifically aimed at reinforcing their respective counter-financing of terrorism systems. Four States in Central Asia have enacted laws to strengthen laws and regulations governing the proceeds of terrorism financing. More than half the States in West Africa — including four States of the West Africa Monetary Union — have revised their terrorism-financing legislation, but only one has criminalized the financing of foreign terrorist fighter travel and another has incorporated a related provision into its counter-terrorism legislation. Four States in the Caribbean, three States in Eastern and Southern Africa and three States in the Middle East and North Africa region have enacted additional terrorism-financing legislation.

In some regions, including West Africa, States continue to suffer from weaknesses in their legislative and operational frameworks for the implementation of resolutions 1267 (1999) and 1373 (2001). Assistance providers have introduced initiatives aimed to encourage designation and cooperation among States in this regard. In November 2016, the Eurasian Group on Combating Money-Laundering and the Financing of Terrorism adopted guidelines for cooperation among its member States in the implementation of terrorist-asset-freezing mechanisms.

Financial intelligence has become more systematically integrated into counter-terrorism work. Public-private cooperation is a must to combat terrorism. Which are the steps follow to optimize this public-private cooperation?

The creation of more public-private terrorism-financing information-sharing platforms is one of the main achievement to counter the funding of terrorism. These platforms have been adopted by an increasing number of States, particularly in the Asia-Pacific region. States continue to strengthen links among their respective financial intelligence units and reporting entities. One European State recently introduce legislation enabling its financial intelligence unit to provide reporting entities with the names of individuals and entities considered to pose a terrorism-financing risk, prior to the submission of a suspicious transaction report. The collection of financial intelligence is key to the identification of the financial patterns of foreign terrorist fighters, the monitoring of individuals and the identification of possible terrorist networks, ISIS facilitators and supporters. Europol hosts, a decentralized computer network that connects all 28 European Union financial intelligence units and facilitates the sharing of suspicious transaction reports. UNODC provides financial-disruption training and courses for counter-financing of terrorism investigators in Afghanistan, Mali, Somalia and other States in North Africa, Central Asia and the Indian Ocean region.

Because money continues to flow from ISIS-controlled territory to affiliates or to be banked in safer locations, close monitoring of informal money-remitters activity and cross-border transportation of cash and other bearer negotiable instruments remains an essential component of an effective counter-financing of terrorism strategy.

Information based on the Fifth report of the UN Secretary-General on the threat posed by ISIL to international peace and security and the range of United Nations efforts in support of Member States in countering the threat and UN Resolution adopted by the General Assembly on 1 July 2016, 70/291. The United Nations Global Counter-Terrorism Strategy Review.

Image: Security Council Debates Countering Terrorism. A wide view of the Security Council open debate on countering terrorism. 14 April 2016.


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