Inside the financial structure of the Islamic State
London - Described by counterterrorism experts as the most organised and affluent terrorist organisation in history, the Islamic State (ISIS) has managed to build a murderous empire through both criminal enterprise and implementing traditional Islamic economic concepts and systems.
US intelligence agencies concluded in June that ISIS is no weaker than it was a year before, despite months of a US-led bombing campaign in Iraq and northern Syria where the group controls large areas.
So how has ISIS managed to not only stay financially afloat but, in some cases, actually thrive in its moneymaking endeavours? A recent report by Dubai-based security firm Five Dimensions Consultants revealed an elaborate, yet Islamically traditional, financial structure used by ISIS to fund activities and recruitment efforts.
For external financing, ISIS uses traditional methods of Islamic fundraising, such as Sadaqah, which means “voluntary charity”. A global network of dedicated fundraisers receives donations from ISIS sympathisers, including from mosques.
According to Five Dimensions, the contributions are collected under the guise of raising funds for necessities such as the upkeep of mosques. This method “is one of the most effective ways for jihad sympathisers to get hold of unaccountable and untraceable cash”, the consultancy said.
What is also worrying is that the report highlights that legitimate charities have had funds diverted towards funding ISIS.
In areas controlled by ISIS, a number of Islamic and secular fundraising concepts are in place, including taxation of trade routes between Syria, Iraq, Turkey, Jordan and areas controlled by the Kurdistan Regional Government. Those taxes are worth about $9 million a month. Moreover, the concept of zakat, one of the five pillars of Islam, which entails donating a portion of one’s income to a religious authority, which dispenses it to the needy, is also a part of ISIS’s moneymaking schemes. ISIS has put together an army of 1,900 zakat collectors, including 800 women, tasked with collecting from the 10 million people under its control, netting the terrorist group an estimated $350 million annually.
The report also reveals that ISIS has established a business network that includes investments in land, legitimate business enterprises and services.
According to the report, Turkish and Syrian ISIS members have bought “existing businesses with well-established relationships with existing suppliers to avoid the due diligence process new customers go through”.
These businesses include pharmaceutical wholesale dealers, car and spare parts dealers, gold and gold workshops, technology equipment and food wholesale dealers.
Because the terror group functions like a state, it has a high expenditure to fund big-ticket items such as hospitals, schools and welfare.
In its effort to maintain its revenue stream the Islamic state currently has a lucrative oil-smuggling business that according to US counterterrorism officials nets the group $8 million-$10 million a month.
“The oil smuggling black market has been operating since the days of Saddam Hussein’s time in the 1990s, when Iraq was under sanctions. And it isn’t just in Turkey, but in Jordan and Syria, even the Assad regime is buying some of the oil, when they can get a hold of it, through intermediaries,” Hassan Hassan, Chatham House associate fellow and co-author of ISIS: Inside the Army of Terror, told The Arab Weekly.
“In Turkey they have trucks that take it to the border through certain routes, according to recent documentations seized by the US government,” Hassan said. “Some corrupt Turkish officials are working with [ISIS] to get all this cheap oil that is half the price of oil in the market.
They sell to all neighbouring areas and countries. They also sell it to the rebels in the north and the Assad regime and the Kurds as well, Turkey, Jordan and so on.”
Hassan said more people are being driven to ISIS out of desperation.
“Families are sending them their sons to join and fight with ISIS in order to get a monthly salary,” he said. “If they are living in urban centres, there are no jobs or sources of income, so the only thing they can do is either try to flee to Europe by sea or join ISIS, otherwise they die of hunger. The more you do try to disrupt ISIS finances, it only empowers ISIS and they can still get money,” he said.