Fyi: (esrc award: es/N009614/1)



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This work has been conducted under the Centre for Research and Evidence on Security Threats through an ESRC grant which is funded in part by the UK security and intelligence agencies.

  • This work has been conducted under the Centre for Research and Evidence on Security Threats through an ESRC grant which is funded in part by the UK security and intelligence agencies.

  • FYI: (ESRC Award: ES/N009614/1)



The aim of this paper is to critically consider the effectiveness of the “Financial War on Terrorism” on the funding streams of the Islamic State of Iraq and Levant (ISIL). The paper identifies the “Financial War on Terrorism” and it then moves on to determine if it is able to tackle and restrict the funding avenues of ISIL.  The final part of the paper comments on how ISIL will need to adapt its funding streams as it continues to lose its previously controlled areas

  • The aim of this paper is to critically consider the effectiveness of the “Financial War on Terrorism” on the funding streams of the Islamic State of Iraq and Levant (ISIL). The paper identifies the “Financial War on Terrorism” and it then moves on to determine if it is able to tackle and restrict the funding avenues of ISIL.  The final part of the paper comments on how ISIL will need to adapt its funding streams as it continues to lose its previously controlled areas

  • .



What is terrorist financing?

  • What is terrorist financing?

  • Sources of terrorist Funding,

  • Cheap terrorism,

  • What is the Financial War on Terrorism?

  • International Legislative Measures:



Islamic State of Iraq and Levant



International Convention for the Suppression of Terrorist Financing:

  • International Convention for the Suppression of Terrorist Financing:

    • “assets of every kind, whether tangible or intangible, movable or immovable, however acquired, and legal documents or instruments in any form” (Article 2, 1999).
  • World Bank:



Terrorist financing has been referred to as ‘reverse money laundering’, which is a practice whereby ‘clean’ or ‘legitimate’ money is acquired and then funnelled to support terrorism

  • Terrorist financing has been referred to as ‘reverse money laundering’, which is a practice whereby ‘clean’ or ‘legitimate’ money is acquired and then funnelled to support terrorism



State Sponsors of terrorism:

  • State Sponsors of terrorism:

    • Sudan, Iran and Syria
  • Private terrorist moneys may be classified into two categories :

      • legitimate,
      • and unlawful funds


Corporate donations,

  • Corporate donations,

  • Non-profit organisations,

  • Drug trafficking,

  • Extortion,

  • Organised retail theft,

  • Fraud,

  • Kidnappings for ransom,

  • Oil refining,



Bishopsgate bomb (1993)

  • Bishopsgate bomb (1993)

    • £3,000, £1bn worth of damage to property
  • World Trade Centre bomb (1993)

    • $400,
    • Ramzi Yousef “we ran out of money to bring both towers down”


Madrid Bombings (2004)

  • Madrid Bombings (2004)

    • €8,000 (EU Commission)
  • London bombings (2005)

    • Between £100 and £200
    • Official estimate £8,000 (HMG 2005)
  • Westgate Mall (2013)

    • $5,000 (US Department of Treasury)


President George Bush declared what has commonly become referred to as the:

  • President George Bush declared what has commonly become referred to as the:

    • ‘War on Terror’ or the ‘Global War on Terror’ on September 20 2001.
  • Instigated by President George Bush on September 24 2001:

    • “we will starve terrorists of funding, turn them against each other, rout them out of their safe hiding places, and bring them to justice”


International Convention on the Suppression of Terrorist Financing (1999)

  • International Convention on the Suppression of Terrorist Financing (1999)

  • UN Security Council Resolutions:

    • 1267
    • 1269
    • 1333
    • 1373
  • Recommendations Financial Action Task Force (February 2012)



Council Resolution 2580/2001.

  • Council Resolution 2580/2001.

  • Framework Decision 151 [2002] OJ L164/3.

  • Council Regulation 881/2002

  • Council Common Position 2001/931/CFSP



“as attacking, whether via criminalisation, confiscation, forfeiture, freezing, sanctioning the financial assets of known or suspected terrorists … [it] also contains the use of preventative methods … and the collection of financial intelligence from suspicious activity reports” (Ryder, 2015)

  • “as attacking, whether via criminalisation, confiscation, forfeiture, freezing, sanctioning the financial assets of known or suspected terrorists … [it] also contains the use of preventative methods … and the collection of financial intelligence from suspicious activity reports” (Ryder, 2015)



This terrorist organisation has been described as ‘the wealthiest terrorist organisation’,

  • This terrorist organisation has been described as ‘the wealthiest terrorist organisation’,

  • Matthew Levitt stated that “estimates put ISIL’s daily income at around $3m, giving its total value of assets between $1.3bn and $2bn” and

  • It has more assets than many nation states.



By September 2014, ISIL had revenues of at least $2bn from internal and external sources (Duhaime, 2015),

  • By September 2014, ISIL had revenues of at least $2bn from internal and external sources (Duhaime, 2015),

  • ISIL’s total assets exceed $2tn, with an annual income totalling $2.9bn and

  • ISIL “approved a $2bn budget” for 2015” (Humud et al, 2015).



Funding Stream 1 – The Control of Oil Reserves:

  • Funding Stream 1 – The Control of Oil Reserves:

    • This involves selling what they have captured to local consumers and black marketers,
    • ISIL has used the same smuggling methods and routes that were used by Saddam Hussein during the 1990s,
    • that generate daily revenues between $1m and $3m,


Funding Stream 1 – The Control of Oil Reserves:

  • Funding Stream 1 – The Control of Oil Reserves:

    • The international community has threatened to impose sanctions on countries that purchase oil from ISIL and
    • However, the effectiveness of sanctions on this funding stream must be questioned.


Funding Stream 2: Kidnapping for Ransom

  • Funding Stream 2: Kidnapping for Ransom

    • This has seen many nation states paying ISIL between $20m and $45m for the release of their citizens,
    • The Congressional Research Services estimated that ISIL has amassed between $35m and $45m in ransom fees in 2014) and
    • Kidnapping for ransom payments have been made despite the approval of UN Security Council Resolution 2133.


Funding Stream 3: Foreign and Private Financial Benefactors

  • Funding Stream 3: Foreign and Private Financial Benefactors

    • ISIL are also able to acquire finances from foreign investors and private benefactors,
    • ISIL receives funding from private donations or via non-profit organisations, thus adopting a similar funding strategy as al Qaeda (FATF)
    • Sympathetic supporters in other countries appear to have also provided ISIL with financial support.


Funding Stream 3: Foreign and Private Financial Benefactors

  • Funding Stream 3: Foreign and Private Financial Benefactors

    • Department of Treasury took the view that ISIL “derives some funding from wealthy donors” and it been estimated that ISIL has collected up to $40m from private donors.
    • However, it has been suggested that the amount of funding provided by private sponsors from has “diminished and is at most only a tiny percentage of the total income that flows into ISIL coffers in 2014”.


Funding Stream 4: Criminal Activities

  • Funding Stream 4: Criminal Activities

    • imposition of illegal taxation measures which raises approximately $360m per year,
    • the sale of artefacts has become ISIL’s second largest funding stream (approximately $100m p/a)
    • In February 2015, the United Nations Security Council passed Resolution 2199, which prohibited the trade of artefacts illegally removed from Syria (since 2011) and Iraq (since 1990)


Funding Stream 4: Criminal Activities

  • Funding Stream 4: Criminal Activities

    • Extortion
    • Bank robberies (similarity with the domestic terrorist groups in the United Kingdom)
    • The unprecedented evolution of the funding streams of ISIL is also illustrated by the creation of its own currency


The unprecedented scale of Islamic State’s finances has been underscored by the development of its own currency: an unparalleled development in the financing of terrorism.

  • The unprecedented scale of Islamic State’s finances has been underscored by the development of its own currency: an unparalleled development in the financing of terrorism.

  • The Islamic State is an extremely well-funded terrorist group that whilst reminiscent of al Qaeda in its pomp, belittles their achievements and those of other terrorist groups.



Evaluations the wealth of illicit organisations relies at best on educated guess work,

  • Evaluations the wealth of illicit organisations relies at best on educated guess work,

  • However, if the most accepted estimates are accurate, and IS indeed earns approximately $1m per day, then from a financial perspective it has the financial capability to operate for many years.



This financial resilience has come about because IS’s financial infrastructure is significantly more advanced than any other known terrorist organisation and the existing counter-terrorist financing measures – the ‘Financial War on Terrorism’ – is not fit for purpose when it comes to IS.

  • This financial resilience has come about because IS’s financial infrastructure is significantly more advanced than any other known terrorist organisation and the existing counter-terrorist financing measures – the ‘Financial War on Terrorism’ – is not fit for purpose when it comes to IS.



Even with more consistent implementation of counter-terrorism financing measures the fact remains that Islamic State’s funding model has proved to be extremely flexible and adaptable, and so it is only when the territorial reach of Islamic State is defeated that we are likely to see their funding streams significantly reduced.

  • Even with more consistent implementation of counter-terrorism financing measures the fact remains that Islamic State’s funding model has proved to be extremely flexible and adaptable, and so it is only when the territorial reach of Islamic State is defeated that we are likely to see their funding streams significantly reduced.



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