FINANCING OF THE TERRORIST ORGANISATION ISLAMIC STATE IN IRAQ AND THE LEVANT (ISIL)
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2015
1.2 FINANCIAL INSTITUTIONS IN SYRIA
More than 20 Syrian financial institutions with operations in ISIL-held territory continue to operate
in Syria. Syrian bank branches in territory where ISIL operates are connected to their headquarters
in Damascus; and some of them may maintain links to the international financial system. Several
Syria-based banks, including the Central Bank of Syria, Commercial Bank of Syria, and Syria
International Islamic Bank, were designated by the US Department of the Treasury and the
European Union.
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As a result, most major financial institutions internationally have probably
severed their ties with these banks in Syria, particularly in ISIL-held territory, making it difficult for
ISIL to gain access to the regulated international financial system via Syria-based banks. However,
there are jurisdictions which the banks operating in the ISIL-held territory are still able to liaise
with.
2. MONEY AND VALUE TRANSFER SERVICES (MVTS)
MVTS companies provide services throughout Iraq and Syria, including in areas where ISIL
operates, according to several US contacts. These financial companies are trusted brokers that have
established relationships throughout the region, which allow them to “transfer” funds to finance
trade and pay remittances, among other financial activities. These MVTS companies would not
conduct wire transfers as banks do, but would send a message via email, fax, or telephone to a local
or foreign associate to pay or receive payment from the counterparty to a transaction. The MVTS
companies would then settle their business at a later date, either through a physical cash payment
or a banking transaction. Since many Iraqis and Syrians do not hold bank accounts, they rely on
these often unregulated MVTS companies for sending, or receiving payments from, local or foreign
counterparties. ISIL could abuse this system of transferring money, especially as the bank branches
under its control have lost their access to the international financial system.
Many money remitters with links to Iraq and Syria use neighboring countries in order to transact
with customers and physically move money to these locations. Analysis of international funds
transfer instructions (IFTIs) from Australia to Syria and Iraq has supported this displacement of
funds – although they appear to reach recipients within Syria and/or Iraq. Australia notes that many
legitimate recipients would be included in this funds flow displacement, as would those individuals
who have been displaced to refugee camps – also displacing the location of beneficiaries. Analysis
has discovered that some remitters have less control/ability to conduct due diligence over end
recipients when their former channels of funds delivery are no longer available due to the
circumstances in Syria and Iraq. This situation presents a more challenging TF risk environment
when it comes to cross border remittances to Syria and Iraq. An example was noted where the
remittance business needed its new counterpart to physically move cash across borders to deliver
to end recipients – while highly practicable, it does raise concerns for misuse of some or all of those
funds in support of ISIL.
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US Department of the Treasury, Press Release (2012).
FINANCING OF THE TERRORIST ORGANISATION ISLAMIC STATE IN IRAQ AND THE LEVANT (ISIL)
2015
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3. SMUGGLING (CASH, GOLD OR OTHER VALUABLE ITEMS)
The UK has noted cash couriers as a known clandestine transfer method for FTFs and that the
couriering takes place in aid convoys or is physically moved by individuals transiting borders in the
region. Cash seizures from subjects intending to travel from the UK to Syria are a common
occurrence. Often times, when cash has been discovered, the subjects were unable to provide an
adequate explanation for the provenance of these funds. Intelligence from other countries has
noted that ISIL will specifically request FTFs to bring money with them in order to join or
participate with the terrorist organisations. One case from Saudi Arabia has noted one passenger
who was trying to transport cash over the declaration requirement divided the amount and
provided it to three other individuals which could be considered a form of cross-border “smurfing”.
Case Study 11: Cash Smuggling
A passenger from an EU member state arrived in İstanbul Sabiha Gökçen Airport with four large
pieces of luggage and two sport bags. Upon the suspicion by the competent authorities at the
airport, he was interviewed and found to be in possession of 3,500 Euro. The passenger stated that
he was visiting and would go back to his homeland in a weeks’ time. Upon search of his luggage,
many pairs of tracking boots, jeans, ISIL labelled t-shirts and sweatshirts and torches were found.
He was denied entry and was added to the Turkish no-entry list.
Source: Turkey
4. FINANCIAL MANAGEMENT AND EXPENDITURE OF FUNDS AND ASSETS
Although ISIL generates a significant amount of revenues, it also has substantial expenses associated
with attempting to fund and administer government-like social and economic programs within the
territory it occupies. The so-called “burn rate”, or amount of money ISIL spends relative to its
revenues, is essential to discerning its overall financial position and strength. ISIL’s illegal
occupation of territory in Iraq and Syria and exploitation of the local population, which is estimated
to be five to six million, increases its ability to raise funds through criminal activities, such as
extortion and theft. However, providing services to such a large number of people could result in a
significant drain on ISIL's coffers. In order to successfully manage the territory which it illegally
occupies, ISIL needs sufficient economic resources to provide basic necessities, such as food, water,
and electricity to the local population.
ISIL also reportedly pays its fighters on average 350 - 500 USD per month.
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With an estimated
20,000 to 30,000 fighters in its employ, this alone would represent a 10 million USD drain on ISIL's
treasury every month. According to the Monitoring Team Report on ISIL and ANF, based on
information provided by a member state, ISIL reportedly pays its members a monthly salary that is
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Zalewski, P. (2014).