Treasury Notes

 Attacking ISIL's Financial Foundations

By: Hagar Chemali
10/24/2014


Speaking yesterday before the Carnegie Endowment for International Peace and later at the White House Press Briefing, Under Secretary for Terrorism and Financial Intelligence David Cohen outlined Treasury’s role within the comprehensive U.S. and international effort to disrupt, degrade and ultimately defeat ISIL. He discussed Treasury’s continuing work, under President Obama’s leadership and together with partners around the world, to deploy innovative tools to undermine ISIL’s financial strength.  

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Under Secretary Cohen described Treasury’s strategy, which involves three mutually supportive elements: 

·         Working to disrupt ISIL’s main revenue sources --  oil sales, kidnapping for ransom, extortion and crime, and donations -- in order to deny it money in the first place.

·         Limiting what ISIL can do with the funds it collects by restricting its access to the international financial system.

·         Continuing to impose sanctions on ISIL’s senior leadership and financial facilitators to disrupt their ability to operate.  


Highlights from his speech include:  

In many respects, our campaign against ISIL’s financial foundation will build on our work over the past ten years…But to some extent, ISIL poses a different terrorist financing challenge.  It has amassed wealth at an unprecedented pace, and its revenue sources have a different composition from those of many other terrorist organizations. So, just as ISIL relies in part on new models to fund itself, we too are adapting our tools and techniques to combat ISIL’s financial activities.” 

“To disrupt the market in oil derived from ISIL-controlled fields, we will target for financial sanctions anyone who trades in ISIL’s stolen oil.  It is true, of course, that ISIL’s 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.  He has a bank account.  His business may be financed, his trucks may be insured, his facilities may be licensed.  All that makes ISIL oil facilitators vulnerable. The middlemen, traders, refiners, transport companies, and anyone else that handles ISIL’s oil should know that we are hard at work identifying them, and that we have tools at hand to stop them. We not only can cut them off from the U.S. 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 ISIL’s fundraising through oil sales, we will leverage the well-established reluctance of banks around the world to facilitate the financing of terrorism.”

“We should not confuse funding with financial strength.  While ISIL today is well-funded, a terrorist group’s overall financial strength turns not just on its income, but also on its expenses and, importantly, the degree to which it can dedicate its resources to violent purposes.  And in that regard, ISIL operates within certain real constraints.”

“I must stress…that the campaign against ISIL’s finances will require more than just financial tools.  This is primarily because, given that ISIL is enriching itself locally, cutting off one key source of funds will require dislodging it from territory in which it operates.  But more broadly, even as this vital military campaign progresses, we recognize that the only solutions to the conflicts in Iraq and Syria are political in nature.  The hateful ideology propagated by ISIL must be countered by tolerant, economically vibrant societies and governments that rule in an inclusive manner.  These are long term goals that the United States is deeply committed to fostering.”  


Review the entirety of his speech and discussion at the Carnegie Endowment for International Peace (CEIP): prepared remarks and full-length broadcast

Learn more about Treasury’s Office of Terrorism and Financial Intelligence.


Hagar Chemali is the spokesperson for Treasury's Office of Terrorism and Financial Intelligence. 

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Posted in:  Office of Terrorism and Financial Intelligence
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