Financial Futures of the Islamic State of Iraq and the Levant: Findings from a rand corporation Workshop

Current State of ISIL’s Finances    31

between 30 to 50 percent. Prior to the operation, the group was making roughly $40 million 

per month.

26

 Within this line of effort, the focus has remained on directly targeting the oil and 

gas supply chain. Separate lines of effort include attacking cash storage sites, eliminating high-

value targets critical to ISIL financial and logistical operations, and capitalizing upon several 

other important variables, including economic downturns in Syria and Iraq. The low price of 

oil globally might have some impact as well, in addition to ISIL’s continued loss of territory. In 

some areas where ISIL is losing territory, it has adopted a scorched earth strategy and destroyed 

gas field installations as it retreats.

27

 Territorial losses have been important because more ter-

ritory means more people and businesses that can be taxed. Over the past year, ISIL has lost 

approximately 40 percent of its territory.

28

 Iraqi forces have retaken the northern city of Baiji 

and the Anbar city of Ramadi, and are likely to take Fallujah soon. Kurdish and Yazidi forces 

have driven Islamic State fighters out of the northern city of Sinjar. Iraqi forces are in the pro-

cess of gearing up for an eventual Mosul offensive.

Disruption of the Oil and Gas Supply Chain

The targeting of ISIL’s oil and natural gas supply chain includes airstrikes against oil fields, 

refineries, and tanker trucks. To date, the coalition has destroyed hundreds of trucks, dis-

rupted fuel supply lines across and outside of ISIL territory, and hit key infrastructure at oil 

fields and other oil production sites. Overall, this has diminished ISIL’s capability to sell oil and 

the capacity of ISIL and purchasers to make and sell refined products such as gasoline. 

Turkey has finally increased its efforts to stop the flow of men and materiel crossing its 

borders, thereby restricting ISIL’s access to the black market.

29

 Securing the border is a Her-

culean task, but one the Turks seem more firmly committed to in the wake of recent terrorist 

attacks in some of their major cities. While the border will likely never be fully secure, more 

earnest efforts to deploy military and police along the border have clearly been helpful in deter-

ring smugglers from moving contraband back and forth.

Bulk Cash Targeting

In addition to attacking ISIL’s oil and natural gas supply chain, airstrikes have also targeted 

sites in Iraq where ISIL stores its cash. Two airstrikes in January 2016 in Mosul destroyed 

an uncertain amount of money, while four more airstrikes in February hit cash storage and 

distribution facilities; estimates have ranged from tens of millions of dollars to a billion dol-

lars, although all estimates are highly uncertain.

30

 Further attacks on cash storage sites have 

occurred since March 2016.

Airstrikes have successfully targeted important individuals, killing a number of high-

ranking financial officials, including two of the group’s finance ministers, Abu Saleh in Novem-

ber 2015 and Haji Imam in March 2016 (although Haji Imam was more of an operational 

official than a finance official), and an oil minister, Abu Sayyaf, the year prior. The airstrikes 

on bulk cash sites, finance distribution, and tax collection centers are a complement to cyber 

26  

Johnston, 2016.

27  

Burgess, 2016.

28  

Warrick and Sly, 2016.

29  

Albayrak and Ballout, 2016.

30  

Johnston, 2016.

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32    Financial Futures of the Islamic State of Iraq and the Levant

reconnaissance and operations the U.S. is conducting against ISIL financial assets.

31

 In turn, 

financial intelligence has been a major source of information beyond just finances and extends 

to relationships between ISIL personnel, pattern of life analysis, foreign fighter movements, 

and sources of resource supply and re-supply.

32

 The attacks on cash storage depots have caused 

the group to start selling off some of its valuable assets, including vehicles.

33

 For those vehicles 

it still does have, ISIL has been forced to ration fuel.

34

Decreasing Liquidity

A relatively new coalition effort is underway to decrease liquidity into ISIL held territory. By 

the summer of 2015, the government of Iraq decided to ban and held in escrow the distribu-

tion of government salaries into ISIL held territories; ISIL had been taxing these salaries as a 

source of revenue. Before this decision was taken, Iraq was paying approximately $170 million 

per month in 2015, or the equivalent of $2 billion.

35

 Furthermore, Iraq has begun to prohibit 

bank branches in cities and towns held by ISIL from making international transfers, instead 

ordering all requests to be routed through the central bank in Baghdad, where they can, in 

theory, be intercepted and stopped. Treasury, in cooperation with the Central Bank of Iraq, is 

working to prevent ISIL from accessing the international financial system. As such, 90 bank 

branches within ISIL held territory were cut off from both the international and the Iraqi 

banking systems and 150 exchange houses have been “named and shamed” and banned from 

participation in the Central Bank of Iraq dollar auctions. As the group remains constrained 

from accessing the banking system both locally and regionally, it will have to continue to store 

its cash in warehouses and vaults, which are increasingly vulnerable to Coalition airstrikes.

36

 

Furthermore, if ISIL is blocked from accessing exchange houses and currency auctions, this 

will limit its ability to procure U.S. dollars, in turn denying the group revenue it could poten-

tially earn from exchange rate arbitrage. 

On the multilateral front, the Counter-ISIL Finance Group (CIFG), co-led by Italy, Saudi 

Arabia, and the United States and currently comprised of 37 member states and organiza-

tions, is tasked with preventing ISIL from using the international financial system, including 

unregulated money remitters; countering ISIL’s extortion and exploitation of economic assets 

and resources; denying ISIL external funding; and preventing ISIL from providing financial or 

material support to foreign affiliates.

37

 The Financial Action Task Force is the intergovernmen-

tal standard setting body for anti-money laundering and countering the financing of terrorism 

and is working with the CIFG to strengthen the international financial system to combat the 

threat posed by ISIL and terrorist financing more broadly.

38

31  

Sanger, 2016.

32  

Windrem and Arkin, 2016.

33  

Gaffey, 2016; BBC News, 2016.

34  

Michaels, 2016b.

35  

Glaser, 2016a.

36  

Michaels, 2016a.

37  

U.S. Department of State, 2015.

38  

Financial Action Task Force, 2016. 

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