FINANCING OF THE TERRORIST ORGANISATION ISLAMIC STATE IN IRAQ AND THE LEVANT (ISIL)
30
2015
determined by several factors, including their particular skills and nationality.
70
Using other figures,
this salary can range from 50 euros per month for unskilled volunteers to 1,500 euros per month for
more skilled members.
71
In addition to a salary, ISIL is also reported to provide other benefits, such
as a stipend for each family member of a fighter.
72
One public report noted that ISIL paid a fighter a
stipend of 50 USD per month for his wife and 25 USD per month for each child.
73
Additionally, ISIL
may also be making regular payments to the families of members killed or captured, as financial
records seized from AQI noted that a militant’s monthly salary would continue to be paid to family
members if the militant was killed or captured.
74
ISIL is using some of its funds in an attempt to improve its popularity among the populations within
the territory it illegally occupies. Some of this spending includes attempts to provide public services,
seen in ISIL’s purchase of diesel generators for distributing electricity to residents of its
territories.
75
Similarly, the group has made attempts to mobilize existing infrastructure to provide
basic services to its holdings. ISIL’s actions immediately following the capture of Mosul Dam were
indicative of its strategy. The group arranged for an engineer at the dam to retrieve electricians
from a nearby town in order to restore stalled generators as well as attempts to import Syrian
engineers to manage the power plant.
76
If ISIL is successful in acquiring additional energy or oil
refinement infrastructure, it would need to operationalize and maintain such facilities. This would
require a hefty investment of monetary resources and personnel.
Much of ISIL’s funding is contingent upon its ability to refine and transport oil. As such, ISIL has built
underground pipelines, and rudimentary stationary and mobile oil refineries. These systems not
only take money to initially install, but also to rebuild after being strategically destroyed. Airstrikes
have been used to not only inhibit ISIL from acquiring strategic battlefield positioning
77
, but also to
target its assets and infrastructure, including its refineries and pipelines.
78
Along these lines, 16
mobile refineries were destroyed by the end of 2014.
79
Energy experts estimate that ISIL can
rebuild a single mobile refinery in 10 days for 230,000 USD, if it could acquire necessary
equipment.
80
Every military strike and prolonged battle without ISIL victory slowly incurs fiscal
injuries which simultaneously damage the group’s ability to generate new revenue and necessitates
further spending to recoup losses.
70
Monitoring Team Report on ISIL and ANF, at 26.
71
Id.
72
Id.
73
Id (citing Institute for Policy Analysis of Conflict (24 Sept. 2014), “The evolution of ISIS in Indonesia”).
74
Bahney, B. et al (2013).
75
McElroy, D. (2014).
76
Habboush, M. and Alwan, A. (2014).
77
Ernst, D. (2014).
78
Blair, D. (2014).
79
Johnson, K. (2014).
80
Id.
FINANCING OF THE TERRORIST ORGANISATION ISLAMIC STATE IN IRAQ AND THE LEVANT (ISIL)
2015
31
While ISIL garners some of its funding from oil, the group is also heavily reliant on this natural
resource for military and civilian needs. Through its advances in 2014, ISIL was able
to acquire the
abandoned battlefield positions, weapons and vehicles previously held by its opponents. Much of
the organisation’s success is dependent on maintaining equipment it seized from Iraqi and Syrian
Regime forces, most notably when it commandeered the major Iraqi city of Mosul.
81
ISIL’s reliance
on oil, apart from the needs of the region it occupies, has a major impact on the group’s net income.
81
Bender, J. (2014).
FINANCING OF THE TERRORIST ORGANISATION ISLAMIC STATE IN IRAQ AND THE LEVANT (ISIL)
32
2015
IV. ISSUES FOR FURTHER CONSIDERATION AND COOPERATION
All terrorist organisations, including ISIL, will always require funds for operational support and to
meet broad organisational requirements. As such, terrorist organisations will use diverse
mechanisms regarding the collection and movement of funds. Many of the terrorist finance
characteristics identified within this report are well known. However, the funding model of ISIL is
different from other terrorist organisations and this report identifies a number of unique funding
sources and terrorist financing techniques which have not been previously addressed in depth by
the FATF. This report has helped identify the most important sources of ISIL funding, particularly of
ISIL funds being generated largely within a territory it occupies such as criminal extortion and the
sale of oil, and in setting a framework for future discussions and further studies. There is a need to
further consider all possible solutions and mechanisms to suppress those funding sources and other
resources and to determine which countermeasures are the most appropriate to implement.
It was not possible in this limited report to provide a comprehensive inventory of measures taken
by all multinational bodies and individual jurisdictions to address the terrorist financing risks
described in this report. That said, the global response on the need address the terrorist financing
threat associated with ISIL has been strong and clear. In particular we have seen an improvement in
the technical compliance with many of the FATF recommendations resulting in stronger legal and
regulatory frameworks. Despite these improvements, many jurisdictions continue to struggle with
meeting the technical requirements associated
with criminalising terrorist financing (R.5),
with
abuse of the NPO sector (R.8), implementing targeted financial sanctions to freeze terrorist assets
without delay (R.6)
and creating legal and operational frameworks to stop, restrain and
enable confiscation of cash related to terrorist financing (R.32).
Taking into consideration that
the 2013 FATF Methodology addresses the effectiveness of AML/CFT systems, jurisdictions should
ensure that these TF-related recommendations, which have an important role in the disruption of
ISIL funding, are being fully implemented.
1. DISRUPTING FINANCIAL FLOWS
Disrupting and dismantling terrorist financing networks is essential in order to combat the ISIL
threat. Without financial resources, the capability and activity of terrorist organisations such as ISIL
are degraded. Interdicting illicit financial flows can limit their ability to launch attacks, increasing
their operational costs and injecting risk and uncertainty into their operations. Disrupting financial
flows can also damage morale, leadership and legitimacy within a network.
A number of donors and providers of technical assistance, such as the UN Office on Drugs and Crime
(UNODC), have incorporated the concept of disrupting illicit financial flows into their framework.
These welcomed initiatives often focus on ensuring member states conduct proactive intelligence-
led assessments and on building effective partnerships both domestically and internationally to
develop a full range of financial disruption options.