FATF Monitoring of Terrorist Financing Risks and Actions Taken to Combat ISIL, Al-Qaeda and Affiliates Financing

Paris, France, 19 October 2018 - On February 27, 2015, the Financial Action Task Force (FATF) issued its report on the Financing of the Terrorist Organisation Islamic State in Iraq and the Levant. Since that time, the FATF has been monitoring evolving terrorist financing (TF) risks associated with the Islamic State in Iraq and the Levant (ISIL) and its affiliates through regular internal reporting. In February 2018, this process was broadened to include Al-Qaeda and its affiliates.

ISIL has lost almost all of the territory it once controlled. This loss of territory correlates with a continued decrease in daily, bureaucratic expenses for the group and possibly a shift of expenditure to promote recruitment and radicalisation, globally. As ISIL moves to an underground insurgency, ISIL will continue to try to extort civilians and commercial activity, and to attempt kidnapping for ransom operations, to make up for its financial losses.

FATF’s internal reporting indicates that the total amount of ISIL’s revenue derived from the sale of oil and oil products has decreased dramatically. Nonetheless, ISIL’s primary sources of revenue still include the smuggling and sale of oil and oil products, as well as extortion and taxation of local populations in areas under its control. Other varied revenue streams from both legitimate sources (salaries, savings, unemployment benefits, loans) and illegitimate sources (kidnapping for ransom; bank looting; and other extortion activity, including outside of ISIL-dominated territory) continue to be exploited for the benefit of the terrorist group, as well.

A shifting risk landscape has had an effect on how funds are raised. Small-scale funding (such as self-funding, crowdfunding and contributions from family and relatives), particularly in the context of small cells and lone actors, appears to be increasingly common. Furthermore, extortion fees levied on departing fighters may also act as an additional revenue stream, as ISIL seeks to exploit the current situation. Affiliates may be encouraged to seek out independent sources of revenue, as core ISIL cuts back on contributions to regional affiliates.

Al-Qaeda and affiliates remain a threat. In some regions, there has been a  resurgence in their presence, drawing on a common ideology. Al-Qaeda and affiliates continue to rely on diverse sources of revenue, particularly donations from terrorist sympathisers. In some regions, Al-Qaeda and affiliates are now moving from stable funding to one-time payments for specific terrorist acts and military operations.

Physical cash movement remains a key method of transferring value to fund terrorist activities, including ISIL, Al-Qaeda and their affiliates. Cash stockpiles uncovered in previous actions taken by members of the FATF Global Network support this view. Other methods of moving funds include Money Value Transfer Services (MVTS) abuse, such as remittance providers who are not regulated, not subject to AML/CFT supervision or are complicit MVTS agents. Pre-paid cards (which are often non-bank account based) have also been identified as a method of moving money across borders and accessing funds. Recently uncovered logistical networks highlight the global reach of ISIL, Al-Qaeda and their affiliates.

Members of the FATF Global Network continue to take strong, coordinated actions to counter the financing of ISIL, Al-Qaeda and their affiliates. Recent actions have led to numerous arrests and prosecutions around the globe against foreign terrorist fighters, unlicensed or complicit MVTS and other structures (such as front companies) used for TF purposes. Similarly, targeted financial sanctions have been implemented at both domestic and international levels against individuals and entities associated with ISIL, Al-Qaeda and their affiliates in order to cut off terrorist funds, but further global disruption effort is needed. Authorities should remain vigilant to counter terrorists, who may attempt to obtain material support, including arms and other controlled goods.

The funding of terrorism or the resourcing of a terrorist entity by any State remains incompatible with the FATF Standards[1]. The FATF will remain diligent in identifying new risks associated with the financing of ISIL, Al-Qaeda and their affiliates, and will continue to take robust measures to ensure that these TF risks are mitigated.

 

[1] Emerging Terrorist Financing Risks (October 2015): Page 20

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