Islamic State survives financially by running extortion rackets across the territory it occupies, according to a new report by the Financial Action Task Force.
The FATF, an international body that sets standards for fighting money laundering and terrorism financing, conducted a four-month investigation into how Islamic State generates and moves its funds, finding that its primary source for money is sophisticated extortion rackets built by robbing, looting and demanding portions of economic resources in areas where it operates. The group’s wealth from extorting the population under its control gives Islamic State access to non-monetary economic assets, as well as physical cash, the FATF said.
Islamic State is a “new type of terrorist organization with unique funding streams that are crucial to its activities,” the FATF said in a statement. “Cutting off this financing is therefore critically important,” it said.
The FATF, in its report, analogized Islamic State’s extortion efforts to those of an organized crime group, saying the group conducts its racket under the auspices of providing protection. “The effectiveness of [Islamic State] extortion relies on the threat or use of force within its operational territory,” the report said.
Islamic State “derived a significant portion” of its wealth by controlling the bank branches in Iraq where it operates, the FATF said. Citing U.S. estimates, FATF said Islamic State generated, or had access to, the equivalent of at least $500 million worth of cash alone, much of which is denominated in Iraqi dinars, as it took control of state-owned bank branches in Ninevah, Al-Anbar, Salah Din and Kirkuk provinces in Iraq in 2014. Islamic State treats private banks differently, leaving the cash in the vaults to be taxed upon withdrawal, FATF said in the report…