World

ISIS Makes $25 Million A Month In Financial Racket

Islamic State is raking in as much as $25 million a month by manipulating Middle Eastern money markets, according to financial experts.

David Butter, a policy fellow at Chatham House, explained ISIS manipulates banking operations in order to bring in millions to a U.K. parliamentary subcommittee. The explanation initially took place in February, however, its notes were published Wednesday.

“The Iraqi central bank foreign currency auction systems are an area that needs to be investigated strongly,” said Butter, who went on to explain how ISIS utilizes those systems to bring in funds on various currency markets.

The scheme ISIS utilizes to bring in this financial bonanza is fairly well-developed and manipulates the hawala system, an informal financial transfer system commonly seen in the Middle East and surrounding regions. Hawala essentially operates on a sort of honor system which operates outside of traditional banking.

According to Butter, ISIS first takes Iraqi dinars (Iraq’s currency) from civil servant pension funds held in banks in the ISIS-held city of Mosul in northern Iraq. ISIS then transfers those funds to Jordanian banks, routes them back into Iraq through the former ISIS-held city of Ramadi, and then “back into the Baghdad system” via the hawala system.

“So when the Iraqi Government does its regular foreign currency auctions, the ISIS money is inserted into that system and they can make a margin on the differences between the various exchange rates there and send it back into their areas through Hawala operatives. This is the way money moves in the Middle East,” said Butter.

Butter said that “credible estimates” show that ISIS is able to bring in $20 to $25 million a month through the financial scheme. In order to remedy the problem, Butter said that the coalition partners working with Iraq to combat ISIS, such as the U.K., U.S. and other Western countries, should work with the government in the capital of Baghdad in order tighten the financial systems.

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