With the exception of a handful of state-sponsored militant groups, the Islamic State is likely the “best-funded terrorist organization” Washington has ever faced, raising $1 million a day from black-market oil sales, $20 million in ransoms over the past year and millions a month through extortion in Syria and Iraq, the Treasury Department’s top official for tracking terrorist financing said Thursday.
David S. Cohen, Treasury undersecretary for terrorism and financial intelligence, said the extremist group, also known by the acronyms ISIS and ISIL, has “grabbed the world’s attention for its outlandish ambitions and astounding brutality, but also for another reason: its substantial wealth. ISIL’s primary funding tactics enable it today to generate tens of millions of dollars per month.”
Mr. Cohen, who spoke Thursday at an event hosted by the Carnegie Endowment for International Peace in Washington, said that “with the important exception of some state-sponsored terrorist organizations, ISIL is probably the best-funded terrorist organization we have confronted.”
There was speculation that Mr. Cohen was suggesting that Iranian-backed groups such as Hezbollah in Lebanon are better funded that the al Qaeda-inspired Islamic State, but he did not elaborate.
A Treasury Department spokesperson declined to specify which state-sponsored groups Mr. Cohen was referencing.
Mr. Cohen sought to downplay the notion that the Islamic State gets significant funding from wealthy Persian Gulf donors such as Kuwait, Saudi Arabia and Qatar — each a U.S. ally.
Unlike al Qaeda’s original core group in Pakistan and Afghanistan, he said, “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,” he said, adding that while there are concerns about individuals using social media to call for donations, particularly in Kuwait, U.S. officials are optimistic that local partners are sincere about cracking down on such activity.
Mr. Cohen said U.S. officials are ramping up efforts to disrupt the flow of revenue that the Islamic State is able to draw from oil smuggling.
“We will target for financial sanctions anyone who trades in ISIL’s stolen oil,” he said, acknowledging that the effort is complicated by the fact that the group’s oil “moves in illicit networks that are largely outside the formal economy, where individuals are less vulnerable to financial pressure.”
Despite such factors, he said, the Obama administration believes the revenue stream can and will be stemmed.
“At some point,” Mr. Cohen said, “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.”
Separately, a recent wave of U.S.-led airstrikes on oil refineries controlled by the extremists in Syria have succeeded in threatening its supply networks, he said.
But there is evidence that some portion of the Islamic State’s smuggling schemes remain intact.
“As of last month,” Mr. Cohen said, “ISIL was selling oil at substantially discounted prices to a variety of middlemen, including some from Turkey, who then transported the oil to be resold.”
“It also appears that some of the oil emanating from territory where ISIL operates has been sold to Kurds in Iraq, and then resold into Turkey,” he said.