Financing is one of the main pillars of the establishment and structure of extremist groups and organizations. Since its establishment, Daesh (the self-proclaimed IS) has adopted a major strategy; money comes before fighting. Therefore, it spares no effort in making money in every way possible. Between $870 million and $1.9 billion was the estimated annual revenue of Daesh between 2014 and 2016, according to the International Center for the Study of Radicalization and Political Violence (ICSR).

Daesh has various means of raising funds including the trade of antiquities, taxes, looting and extortion, but its most prominent source of funding is the oil trade. Since its emergence in Iraq and Syria, Daesh has fought to seize control of oil sources. In “L’argent De La Terreur – Enquête sur les trafics qui financent le terrorisme,” Denis Boulard and Fabien Piliu claim that Daesh controlled 160 oil wells in Syria in 2015 which provided the hardline organization with a daily income of €1.4 million.

The counterterrorism department of the US Treasury estimated Daesh’s revenues from oil exports in 2014 and 2015 at $500 million a year. Hence, oil is clearly a major means by which Daesh finances its independent expansion operations without any reliance on any external financial backing. The value of trade in antiquities and stolen art from Mosul and elsewhere is estimated by the Iraqi government at up to $100 million a year.

Many countries have made great individual and collective efforts in an attempt to disrupt the sources of financing of Daesh. One prominent example of such efforts is the establishment of the Counter ISIL Finance Group (CIFG) in January 2015 as a key component of the Global Coalition to Counter Daesh. The CIFG’s mission is to disrupt the sources of the organization’s revenues and its ability to transfer and use funds to wage its campaign of terror. The group and its meetings are co-chaired by Saudi Arabia, Italy and the United States of America, with the participation of representatives from 26 countries and multilateral organizations. It has convened several meetings, with the first in Rome in March, 2015.

Members of the CIFG announced its action plan, which is based on four key objectives: to prevent Daesh’s use of the international financial system; to counter Daesh’s extortion and exploitation of economic assets and resources; to deny Daesh funding from abroad and to prevent Daesh from providing financial or material support to foreign affiliates.

The first meeting of the CIFG was followed by another in May of the same year in Jeddah, where the members issued a “communiqué [that] rejects the payment or facilitation of ransoms to (Daesh), so as to deny (Daesh) an important source of funds”. The group’s third meeting was convened in the same year in Washington, and saw the launch of four outcome-oriented project groups, which are tasked with examining Daesh’s cross-border illicit financial flows, their smuggling of oil, their financial connections with affiliates and their looting and sale of antiquities.

In February 2016, a joint FATF-CIFG meeting brought together the Egmont Group of Financial Intelligence Units, the International Monetary Fund and the World Bank, to raise greater awareness among the International Community with respect to Daesh’s financial transactions and to examine counter Daesh financing strategies. Further meetings were held consecutively in order to disrupt the financial strength of Daesh with a view to economically degrading and eventually bringing the terrorist organization to an end.

Finally, a timelined tracing of the funding sources of terrorist organizations and the development of tracing tools remains the biggest challenge for countries, which requires the cooperation of all countries and specialized organizations in order to address various forms of financing, which in turn are renewable. Financing gives terrorists the means to carry out their attacks, to provide for their networks all over the world and to spread their extremist ideology through propaganda.

— Dr. Ibrahim Al-Othaimin is a Middle East affairs specialist and security analyst based in Riyadh. He can be contacted at Ibrahim.othaimin@gmail.com. Follow him on Twitter @Alothaimin