How do ISIS terrorists finance their attacks?

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Meeting in Turkey just two days after the horrific terrorist attacks in Paris, leaders of the G-20 countries issued a statement condemning recent Islamic State in Iraq and Syria (ISIS) attacks and reaffirmed their commitment to combat terrorism. More specifically, the group of industrial nations recommitted itself to "tackling the financing channels of terrorism." Which begs the question: How does ISIS finance its international operations?

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ISIS is primarily financed through a wide array of criminal activities, large and small, centered in the parts of Syria and Iraq that are under the group's control. ISIS steals livestock; sells foreign fighter passports; taxes minorities and farmers and truckers; runs a sophisticated extortion racket; kidnaps civilians for ransom payments; loots antiquities; and much more. It also makes about $40 million a month from illicit oil sales alone. But these sources primarily support the group's expensive state-building and war-fighting enterprises back home, ranging from paying teacher's salaries and collecting the garbage to bribing tribal leaders and paying fighters' salaries.

There is, however, an entrepreneurial self-financing model that ISIS recruits and supporters around the world have been encouraged to use to fund either their travel to ISIS-controlled land or, perhaps, their attacks in the West. While it is too soon to state with any certainty how the Paris attacks were funded, the likelihood is that they were funded in whole or in part through local criminal activities — or otherwise legal activities such as the use of state welfare benefits or taking out a loan. None of these would surprise, since authorities have been tracking the use of such funding schemes by prospective foreign terrorist fighters looking to join ISIS. Indeed, earlier this year, a Financial Action Task Force (FATF) report identified several potential revenue streams for would-be foreign terrorist fighters, including robbery and drug trafficking, various social service payments, and unpaid loans. Some potential plotters or travelers took on short-term jobs to raise the money the needed, while others simply drew on their savings or student loan accounts.

Consider a few examples. Michael Zehaf-Bibeau, who murdered a Canadian soldier before attacking Canadian Parliament buildings in October 2014, worked at one of the Alberta oil fields to raise money for his attempted travel to Syria. Petty crime has the potential to bring in sufficient funds for a homegrown attack or transportation to a combat zone as well. There is the case of the 15-year-old boy in Montreal who held up a convenience store with a knife, stealing some $2,200 to pay for his plane ticket out of Canada. The teen's father turned him in to the police after finding the money in his son's bag. Or take the four men arrested in February in Brooklyn, N.Y. for attempting to join ISIS. Some of their funds were supplied by a supporter who operated mall kiosks selling kitchenware and cellphones. According to the indictment, a round-trip ticket to Istanbul cost a mere $598. One of the defendants expected that "he would not need to bring more than $400 to travel to Syria because he would not have any concerns in the land of the Islamic State." In Britain, the Metropolitan Police's counterterrorism command unit has noted several cases where jihadists financed themselves through state-funded welfare payments. Most recently, Yahya Rashid used his student loans and educational grants to cover the travel costs for himself and four friends to go join ISIS in Syria via Morocco and Turkey. Closer to home, Christopher Cornell, who stands accused of plotting to detonate pipe bombs at the U.S. Capitol and shoot people as they ran away, simply "saved money" to conduct his attack, according to the FBI. In several cases, including the shooting in Canada, individuals whose travel to Syria was thwarted turned to deadly attacks at home instead, easily redirecting transportation funds toward homegrown acts of terrorism.

And while ISIS's governance and military expenses in Syria and Iraq are high, carrying out an attack in the West is inexpensive. Take, for example, the January attacks in Paris against Charlie Hebdo magazine, a police officer and a kosher grocery. Amedy Coulibaly claimed to have helped the Kouachi brothers with their "project" by giving them "a few thousand euro" so they could buy what they needed to buy. The two Kouachi brothers reportedly received $20,000 from al Qaeda in the Arabian Peninsula (AQAP), but the rocket-propelled grenade launcher and the Kalashnikov automatic assault rifles used by the Kouachis cost less than $6,000. Coulibaly himself reportedly used a false income statement to take out a 6,000 euro loan to finance the purchase of weapons for the attacks. And while AQAP claimed responsibility for the Kouachis' attack, Coulibaly self-identified with ISIS.

Another possible funding stream available to terrorist operatives in the West is old-school: abuse of charity. In light of the catastrophic humanitarian crisis in Syria and Iraq, the FATF warned earlier this year that "the possibility of abusing charities by ISIL [another name for ISIS] or its affiliates directly or indirectly for fundraising or funding activities needs to be recognized." Over the past year, European countries have taken action against several charities over terror finance suspicions. Last November, French authorities shut down Pearl of Hope, a charity that claimed to "promote the health and education of sick Syrian and Palestinian toddlers," arresting two people on charges of financing terrorism. According to investigators, while Pearl of Hope did deliver food and medical supplies, "the group was also using such deliveries as a front to funnel covert funds to jihadist groups and had links to the Nusra Front." About a dozen other charities were under surveillance at the same time, some on suspicion of ties to ISIS. To date, these cases involved raising funds for terrorist activities in Syria and Iraq, but the potential for skimming small amounts of money off the top for terrorist travel or operations has authorities concerned.

There is one other way attacks like those in Paris may have been financed, in whole or in part: with funds from ISIS itself. Unlike previous attacks, which were almost all lone-offender plots inspired by ISIS, the Paris attacks were foreign-directed operations planned outside France as part of what CIA director John Brennan recently described as ISIS's "external operations agenda." This agenda is reportedly led by senior ISIS official Abu Muhammad al-Adnani, whose recorded messages calling for attacks in the West appear to correlate to the increased operational activities of ISIS operatives in Europe. Late last year, as European foreign terrorist fighters affiliated with ISIS began trickling back home to Europe — some, it is now believed, to carry out attacks — al-Adnani issued this directive to ISIS followers: "If you can kill a disbelieving American or European, especially the spiteful and filthy French, then rely on Allah and kill him in any manner or way however it may be." According to former French counterterrorism judge Jean-Louis Bruguière, Abdelhamid Abaaoud, the purported ringleader of the Paris attacks and several earlier plots, would almost certainly have been in contact with senior ISIS officials about plots like these.

And in the event that ISIS leaders wanted to send funds from their war chest to finance operations abroad, there are several ways they could do so even as ISIS has been largely cut off from the formal financial system. The Central Bank of Iraq, for example, has instructed financial institutions to prevent wire transfers to and from banks located in ISIS-held areas, and international banks with regional branches in these areas have relocated their staff. But there are other ways ISIS could send funds if it chose do so, beyond having returning foreign terrorist fighters carry small sums of money back to Europe on their person.

First, despite the Iraqi government's efforts, officials remain concerned that the Assad regime in Syria has not placed any restrictions on the banks in ISIS-held areas. And even in Iraq, the FATF warns, some bank branches in ISIS areas "may maintain links to the international financial system." Although many international institutions likely cut ties to these banks, FATF found that the latter are still able to liaise with certain, unnamed jurisdictions.

ISIS has also engaged in backdoor banking, accessing banks with ties to the international financial system just outside the areas it controls. Dutch officials report that foreign terrorist fighters who arrived in Syria or Iraq were using their European debit cards linked to their national bank accounts when withdrawing money from ATMs in areas near where ISIS operates.

Beyond the formal banking system, ISIS can also send and receive funds through nearby foreign money remitters. Finnish authorities report that a common method of getting funds to foreign fighters once they arrive in Syria or Iraq is to send it via "money remitters who have agents operating in border areas close to ISIS-held territory." Dutch authorities have noted similar activity and "regard it highly likely that ... intermediaries transport cash to areas near territory occupied by ISIS." ISIS operatives have come up with other schemes as well. For example, Saudi authorities reported to FATF that individuals associated with the group solicited donors via Twitter and told them to establish contact via Skype. The operatives then asked these donors to purchase international prepaid cards (e.g., mobile phone credit or store credit) and send them the card numbers via Skype. The information would eventually reach a follower near ISIS-held territory in Syria, who could then sell it and take the resulting cash to the group. While these cases all involve the movement of funds to Syria and Iraq, they could be used just as easily to send funds in the opposite direction.

Whether the Paris attackers financed their operations through criminal or other activities in Europe, or whether they were funded in whole or in part by ISIS funding from leaders in Syria and Iraq, the fact remains the attacks were certainly inexpensive. Following the money trail after the fact can be an extremely effective investigative and intelligence tool to map out covert networks, identify other operatives and prevent follow-up attacks, but the financial intelligence tool is no panacea. At the end of the day, such small sums of money are easy to come by and can facilitate painfully successful attacks.

Levitt, a former senior Treasury Department official, is a senior fellow and director of the Stein Program on Counterterrorism and Intelligence at the Washington Institute for Near East Policy.

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