The US strategy to cut off access to revenue by ISIL involves three mutually supportive elements, a Treasury Department official said in a speech on Thursday.
"First, we are working to disrupt ISILآ’s revenue streams in order to deny it money in the first place," said David S. Cohen, under secretary for Terrorism and Financial Intelligence, in his speech entitled, "Attacking ISIL's Financial Foundation." "Second, we aim to limit what ISIL can do with the funds it collects by restricting its access to the international financial system. And finally, we will continue to impose sanctions on ISILآ’s senior leadership and financial facilitators to disrupt their ability to operate." The first element of the strategy involves working to cut off ISILآ’s main sources of funding, in particular its revenue from oil sales, ransom payments, extortion and crime, and support from foreign donors, Cohen said in a speech at the Carnegie Endowment for International Peace.
"To disrupt the market in oil derived from ISIL-controlled fields, we will target for financial sanctions anyone who trades in ISILآ’s stolen oil," he said.
ISIL oil moves in illicit networks that are largely outside the formal economy, where individuals are less vulnerable to financial pressure, but at some point, that oil is acquired by someone who operates in the legitimate economy and who makes use of the financial system, Cohen said.
"The middlemen, traders, refiners, transport companies and anyone else that handles ISILآ’s oil should know that we are hard at work identifying them, and that we have tools at hand to stop them," he said. "We not only can cut them off from the US financial system and freeze their assets, but we can also make it very difficult for them to find a bank anywhere that will touch their money or process their transactions.
In combating ISILآ’s fund-raising through oil sales, we will leverage the well-established reluctance of banks around the world to facilitate the financing of terrorism." It appears that some of the oil emanating from territory where ISIL operates has been sold to Kurds in Iraq, then resold into Turkey, Cohen said. "And in a further indication of the Assad regimeآ’s depravity, it seems the Syrian government has made an arrangement to purchase oil from ISIL," he added.
The Turkish and Iraqi Kurdish authorities have both made commitments to combat whatever oil smuggling occurs in their territory, Cohen said.
To prevent ISIL from raising funds through ransoms, "we are redoubling our efforts to translate the emerging international consensus against the payment of ransoms to terrorist groups into a more widely adopted practice," he said.
"Refusing to pay ransoms to terrorists not only makes it less likely that Americans will be taken hostage, but it also deprives terrorists of funding critical to their deadly aspirations and operations.
"If we are to protect our citizens and avoid bankrolling our adversary, every country must adopt and implement a no-ransoms policy." To prevent ISIL from raising funds from donors abroad, "we will continue to identify its financial supporters and target them for sanctions.
"We are working especially closely with our friends in the Gulf, who are stalwart partners in the anti-ISIL coalition, to ensure that they all have the tools in place to combat terrorist financing, and that they all use those tools effectively. We appreciate the close collaboration and strong steps taken by the Emiratis and the Saudis to combat ISIL financing." "As we make progress in disrupting ISIL's current sources of income, and as ISIL gains additional prominence in the global terrorist movement, we must be prepared for the possibility that wealthy extremists will increasingly seek to fund it," he said.
Shutting down the revenue flow from ISIL's extortion networks ultimately will require breaking its hold on territory, Cohen said. Other lines of effort in the anti-ISIL coalition are focused on this crucial objective, he added.
"As we work to disrupt ISIL's sources of income, we are focused on restricting ISIL's access to the international financial system in order to impair its ability to collect funds from abroad, and to move, store and use the funds it acquires locally," Cohen said.
ISIL's ability to make the most effective use of money that it raises depends on its access to the banking system in Syria, Iraq and internationally, he said. ISIL will have a hard time funding external operations, including facilitating the movement of foreign fighters, without access to the international financial system, he said.
"To that end, we are working to limit ISIL's ability to transact through the Iraqi, Syrian and international banking systems," Cohen said. Through cooperation with the Iraqi authorities, bank headquarters and the international financial community, "we aim to prevent ISIL from using those bank branches," he said.
The private sector is also playing a key role in this element of the strategy, he said. Bank Secrecy Act reports filed with the Treasury Department by financial institutions provide the US government with valuable insight into financial activity in areas where ISIL operates, he said, adding, "We carefully review these reports for indications of ISIL financing and quickly disseminate information to the appropriate authorities." The United States will continue to dismantle ISIL's financial foundation through targeting for designations its leadership, supporters and financial facilitators, Cohen said.
"We have already stepped up our designations of ISIL officials, both those based in Iraq and Syria and their financial supporters outside the area," he said. "Most recently, on September 24, Treasury sanctioned two high-profile individuals associated with ISIL - a financial facilitator who arranged for a 2-million-dollar donation from the Gulf, and a senior military commander. Both were based in Syria, soliciting donations, procuring military equipment, and recruiting foreign fighters to ISIL's areas." ISIL's territorial ambitions are a financial burden, Cohen said.
"Attempting to govern the cities, towns and sprawling territory in Iraq and Syria where it currently operates, much less delivering some modicum of services to the millions of people it seeks to subjugate, is expensive," he said. What this means is that ISIL cannot possibly meet the most basic needs of the people it seeks to rule, Cohen said. "In fact, we are already seeing reports of water and electricity shortages in Mosul as ISIL fails to deliver. As we make progress in diminishing ISIL's revenues and its freedom to use them, we will further exploit this vulnerability."