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need for refined crude and declining oil prices. There have been efforts to suppress the sale of ISIL
oil and oil products on regional markets, such as enhanced counter smuggling efforts of the Turkish
authorities in the past two years, as well as recent steps taken by the Kurdistan Regional
Government (KRG) and Iraqi Government authorities to seize suspected ISIL-related shipments of
oil and oil products. This has reduced oil’s importance relative to other sources of revenue. There is
still a need to better identify the origin, middlemen, buyers, carriers, traders and routes through
which oil produced in ISIL-held territory is trafficked.
This report provides limited insight into the role of financial institutions and Money and Value
Transfer Services (MVTS) in ISIL-held territory as well as the role of the larger international
financial sector. However, a significant portion of the data related to this subject is of a sensitive
nature and could not be included in this public report. There is a risk that MVTS companies in ISIL-
held territory continue to maintain connections to regional counterparts through which ISIL could
conduct funds transfers. At the same time, both the Iraqi government and many major global
financial institutions have taken steps to prevent banks in ISIL-held territory from accessing the
international financial system.
Donors who provide economic and material support, through Foreign Terrorist Fighters (FTFs), are
a diverse and complicated area to address in this type of a report. Many of the FTFs come from a
wide range of countries making this truly a global TF risk. The financing associated with FTFs is a
cycle and support can take the form of self-funding for travel expenses; carrying money overseas for
the benefit of ISIL; and providing funds to support those FTFs on the ground. As recent events have
demonstrated, returning FTFs and lone actors represent a significant terrorism threat to all
countries.
Another key finding of the report is that this terrorist organisation relies on grass-root funding
sources and has utilized efficient delivery mechanisms to obtain funds through the latest
technology. Terrorist fundraising through modern communication networks and the use of
crowdfunding techniques have significantly increased over the past decade and efforts to combat it
must also stay up-to-date.
The purpose of this report was not to create or define a set of policy options to address counter-
terrorist financing efforts against ISIL. The report’s concluding section looks at issues the FATF
should consider further to include increased international cooperation.
It should be noted that a number of traditional countermeasures used to deprive terrorist
organisations of its funds are not applicable with respect to this new model adopted by ISIL.
However, like any terrorist organisation, ISIL’s financial, logistical and supply networks are
vulnerable. Disruption of command, control and economic structures will hinder ISIL’s ability to
finance its operations and support its fighters. Whatever measures are taken it will be critical, as
emphasized in the relevant United Nations Security Council Resolutions (UNSCRs), that they do not
affect the provision of humanitarian assistance to the vulnerable populations and refugees in Syria
and Iraq and surrounding areas.
in various capacities to the efforts to combat ISIL. Partners that have joined this effort to date can be
found at
www.state.gov/s/seci/
.
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Finally, this report represents an opportunity to update global CFT efforts and will help identify
existing and potentially new countermeasures that could be utilized to deprive ISIL of its resources
and disrupt its financial flows. Numerous examples demonstrate efforts taken to disrupt ISIL from
its resources. Further consideration will also have to be given to determine how best the
international community can prevent ISIL from using or benefiting from the financial and
commercial sectors under its control.
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I. INTRODUCTION
PURPOSE, SCOPE AND OBJECTIVES
In October 2014 the Financial Action Task Force (FATF) agreed to launch a four-month project to
understand the financing of the terrorist organisation Islamic State in Iraq and the Levant
(hereinafter ISIL). This study identifies how funds are raised, moved and ultimately used by ISIL.
This report seeks to understand how ISIL obtains and moves funds in order to (i) disrupt financial
flows, (ii) deprive ISIL of its resources, and (iii) prevent ISIL from abusing relevant financial and
economic sectors. Given the diversified nature of ISIL funding and operations, the report considered
the broader issue of resourcing to accurately capture the complexities of this terrorist organisation.
The purpose of this study is to identify how the sources of funding represent a threat to the integrity
of the international financial system and to global safety and security. It is meant to assist States in
the implementation of the FATF standards and support the identification of potential gaps in States’
implementation and identify issues for discussion. It is also meant to assist States in the
implementation of their broader obligations under relevant United Nations Security Council
Resolutions (UNSCRs), including 1267 (1999), 1373 (2001), and the recently adopted UNSCRs 2161
(2014), 2170 (2014), 2178 (2014)
2
and 2199 (2015) in which the UNSC specifically condemns “any
engagement in direct or indirect trade involving ISIL” and requires all member States to prevent
and suppress the financing of travel of foreign terrorist fighters (FTFs) and of their activities.
METHODOLOGY, PARTICIPANTS AND DATA UTILIZED
This report has been prepared under the co-lead of Turkey and the United States (US) and has input
from a wide variety of other delegations within FATF’s global network
3
and other publicly available
information through open source channels.
4
This paper builds on the February 2008 FATF Report
on Terrorist Financing in that it also addresses the terrorist requirement for funds and broader
organisational costs for the terrorist organisation.
5
This report also relies heavily on the report by
the UN Al-Qaida and Taliban Monitoring Team (hereafter the Monitoring Team) submitted pursuant
to UNSCR 2170 (2014) that was issued on 14 November 2014 (hereafter the Monitoring Team
Report on ISIL and ANF).
Delegations have submitted information and cases studies which identify funding sources and
channels used by ISIL to raise money, such as the proceeds of criminal activities, illegal exploitation
of oil and petroleum products and donations. Data was also received showing mechanisms used by
2
UNSCR 2178 (2014) is global in scope and covers FTF operating in all regions of the world.
3
Australia, Bahrain, Canada, European Commission (EC), Finland, France, Jordan, Italy, MENAFATF, The
Netherlands, Saudi Arabia, Russian Federation, Turkey, United Kingdom, United Nations (CTED,
UNODC, Monitoring Team) and The World Bank.
4
The views mentioned in open source references that are quoted or referred in this report are not
neccessarily shared or consented by the FATF.
5
FATF (2008)