Terror’s enormous bankroll

WASHINGTON—Worldwide terror organizations such as Islamic State (ISIS), Boko Haram, al-Shabaab, and Hezbollah have sophisticated means of bringing in hundreds of millions of dollars in income each year, according to a new congressional task force report.

“These terror groups are like water flowing down a mountain; they get blocked in one area and then find another way,” said Rep. Robert Pittenger, R-N.C., the vice chairman of the House Financial Services Committee’s Task Force to Investigate Terrorism Financing. “Terrorists are very smart and are always looking for an alternative path for the transfer of funds.”

The 21-member, bipartisan task force released a 191-page report Tuesday detailing its 12-month investigation into how terrorists finance their carnage. Lawmakers concluded terror organizations manipulate corrupt governments and lax regulations to extract millions. Terrorists also bankroll operations by selling stolen antiquities, kidnapping for ransom, and coordinating with drug cartels. The task force called on Congress and the executive branch to play a part in liquidating worldwide funding for terrorism.

Since peaking in late 2014 and early 2015, the income and financial assets of ISIS have declined, but the group still operates with an annual budget of about $500 million. As sanctions slow oil revenue, ISIS continues to innovate new fundraising methods.

Exact profits are impossible to determine, but Iraqi officials estimated ISIS looted as much as $100 million worth of antiquities in 2015 alone.

But terrorists use white-collar methods as well, including taking advantage of discrepancies in the international banking system and weak government regulations. Those methods of money transfer damage the global economy and make waves in the United States, too. One estimate found terrorists used trade-based money laundering to move $220 billion in illicit value out of the United States in the form of value transfer in 2013.

“The consensus that emerged from the task force hearings was that there is a need for greater information sharing throughout the financial system and among government agencies, as well as increased integration of government databases,” according to the report.

Pittenger told me the U.S. Treasury does not have the resources or personnel to provide the proper oversight to block terrorists from taking advantage of governments and the banking system. According to the report, fewer than 18 Treasury personnel oversee all foreign embassies.

The world’s deadliest terror group, Boko Haram, operates on a smaller budget than that of ISIS but has no problems generating income. Boko Haram deploys a system of couriers to move cash inside Nigeria and across the border from neighboring countries. Its annual net income reportedly is $10 million, raised primarily through kidnapping and extortion. In February 2013, Boko Haram received $3 million for the release of a French family of seven kidnapped in northern Cameroon. The group also engages in drug smuggling to raise money.

“Combating terror financing is a significant and often overlooked component of our national security strategy,” said Rep. Mike Fitzpatrick, R-Pa., the task force’s chairman. “This report signals to the next Congress and Treasury Department that we must continually evaluate and improve our response toward international terror and criminal financing.”

Pittenger added he hopes the incoming administration, led by President-elect Donald Trump, will prioritize building better partnerships with ally countries to snuff out terror financing. That would include ensuring the Treasury Department had enough staff and resources to stop terror groups from engaging in illicit money transfer within the United States and other governments around the world.