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Treasury official on the challenges of disrupting ISIS’s finances

David S. Cohen, the Under Secretary for Terrorism and Financial Intelligence at the Department of the Treasury, gave a speech on Thursday providing a rich examination of the terror group ISIS’s finances. Cohen highlighted how Treasury’s existing tools for disrupting terrorism finance have been of limited utility, prompting the need to develop new tools and capabilities. A key paragraph from the speech:

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. Unlike, for instance, core al-Qa’ida, ISIL derives a relatively small share of its funds from deep-pocket donors, and thus does not, today, depend principally on moving money across international borders. Instead, ISIL obtains the vast majority of its revenues through local criminal and terrorist activities.

Cohen then describes in detail ISIS’s five key sources of funding – oil smuggling, kidnapping for ransom, local extortion, other criminal activities, and funds from wealthy donors – and discusses what Treasury is doing, working with international partners, to disrupt ISIS’s finances in each of these areas, with a particular focus on the intermediaries involved in the process of smuggling oil from ISIS-controlled territory out into the downstream segments of the global oil market.

Overall this was a very informative speech on a critical aspect of efforts to degrade ISIS’s capabilities. You can read the full remarks here.