The Islamic State of Iraq and Syria makes $1 million a day from black market oil sales and has raised $20 million in ransom fees this year, according to a Treasury official who warned that the breadth of the terrorist group’s money-raising schemes makes cutting off its funding difficult.
The group “has amassed wealth at an unprecedented pace, and its revenue sources have a different composition from those of many other terrorist organizations,” said David Cohen, Treasury undersecretary for terrorism and financial intelligence.
Speaking at the Carnegie Endowment for International Peace Thursday, Cohen said that because the Islamic State does not rely on a few rich funders the way other terrorist groups have, the U.S. government will have to adjust its strategy for cutting off funds that support its military and terrorist activities.
“As with the rest of the campaign against [the Islamic State], our efforts to combat its financing will take time. We have no silver bullet, no secret weapon to empty [the Islamic State’s] coffers overnight. This will be a sustained fight, and we are in the early stages,” said Cohen, adding that the Treasury will remain committed to degrading the group’s financing as long as it threatens Iraq and Syria.
The Islamic State gets much of its funding from the oil fields it controls in Iraq and Syria, selling both crude and refined oil to middlemen and smugglers, including some from Turkey, who can sell it on world markets, Cohen said.
In addition to raising significant funds from kidnapping ransoms, the extremist group also profits from the extortion of people and businesses in the areas it controls, as well as from crimes such as bank robberies and sex trafficking, Cohen said. All of those revenue streams come on top of support from wealthy financiers from around the Arabian Gulf.
Crimping those flows of funds will require sanctions on any middlemen who deal with Islamic State-produced oil, as well as convincing countries to stop paying ransom to kidnappers, Cohen said. It will also involve sanctions on outside donors, which Treasury has been engaged in. Cohen also stressed the need to limit the Islamic State’s access to the banking system and to target sanctions on the group’s leadership.
