ISIS has found a huge money-making method that is 'impervious to sanctions and air raids'

Before you go, we thought you'd like these...
Before you go close icon
Where Does ISIS Gets Its Money?

The US has stepped up attacks on oil trucks in Syria in an effort to hit a major source of funding for ISIS. But that's likely not nearly enough to significantly affect the terrorist group's bottom line.

A recent report in The New York Times shows that ISIS (also known as the Islamic State) pulls in hundreds of millions of dollars from "taxing" and extorting those who live in the territory the group controls in Iraq and Syria.

ISIS is thought to make as much as $800 million or $900 million from residents and businessmen in its territory, American and European officials told The Times. And this revenue isn't easy to diminish since it has "so far proved largely impervious to sanctions and air raids," according to The Times.

Data curated by InsideGov

Experts have long said that taxation and extortion is ISIS' main revenue source, but The Times showed the extent to which ISIS is entrenched in the cities and towns it has seized.

Since ISIS markets itself as a legitimate state complete with the functions of any other government bureaucracy, the militants have created a complex financial system to extract as much money as possible from individuals and businesses. ISIS charges import taxes, rent for businesses, fines for breaking laws, utility bills, and income tax.

See what it's like to live under ISIS' rule:

28 PHOTOS
What life looks like under ISIS rule, Islamic State
See Gallery
ISIS has found a huge money-making method that is 'impervious to sanctions and air raids'
FILE - This undated file image posted on a militant website on Jan. 14, 2014, which has been verified and is consistent with other AP reporting, shows fighters from the al-Qaida linked Islamic State of Iraq and the Levant (ISIL) marching in Raqqa, Syria. slamic State militants are barricading down for a possible assault on their de facto capital Raqqa, hiding among civilian homes and preventing anyone from fleeing, as international airstrikes intensify on the Syrian city in the wake of the Paris attacks. For many, the threat of missiles and bombs from the enemies of Islamic State is more of an immediate threat than the vicious oppression of the jihadisâ themselves. (AP Photo/Militant Website, File)
In this photo released on May 4, 2015, by a militant website, which has been verified and is consistent with other AP reporting, Islamic State militants pass by a convoy in Tel Abyad town, northeast Syria. In contrast to the failures of the Iraqi army, in Syria Kurdish fighters are on the march against the Islamic State group, capturing towns and villages in an oil-rich swath of the country's northeast in recent days, under the cover of U.S.-led airstrikes. (Militant website via AP)
This undated file image posted on a militant website on Jan. 4, 2014, which is consistent with other AP reporting, shows Shakir Waheib, a senior member of the al-Qaida breakaway group Islamic State of Iraq and the Levant (ISIL), left, next to a burning police vehicle in Iraq's Anbar Province. For the al-Qaida breakaway group that overran parts of Iraq this week, the border between that country and Syria, where it is also fighting, may as well not even be there. The group, wants to establish a Shariah-ruled mini-state bridging both countries, in effect uniting a Sunni heartland across the center of the Mideast.
This file image posted on a militant website on Tuesday, Jan. 7, 2014, which is consistent with AP reporting, shows a convoy of vehicles and fighters from the al-Qaida-linked Islamic State of Iraq and the Levant (ISIL) fighters in Iraq's Anbar Province. The Islamic State was originally al-Qaida's branch in Iraq, but it used Syria's civil war to vault into something more powerful. It defied orders from al-Qaida's central command and expanded its operations into Syria, ostensibly to fight to topple Assad. But it has turned mainly to conquering territory for itself, often battling other rebels who stand in the way. (AP Photo/militant website, File)
This undated file image posted on a militant website on Tuesday, Jan. 14, 2014, which has been verified and is consistent with other AP reporting, shows fighters from the al-Qaida linked Islamic State of Iraq and the Levant (ISIL) marching in Raqqa, Syria. Moderate Syrian rebels are buckling under the onslaught of the radical al-Qaida breakaway group that has swept over large parts of Iraq and Syria. Some rebels are giving up the fight, crippled by lack of weapons and frustrated with the power of the Islamic State of Iraq and the Levant. Other, more hard-line Syrian fighters are bending to the winds and joining the radicals. (AP Photo/Militant Website, File)
FILE - This image posted on a militant website on Saturday, June 14, 2014, which has been verified and is consistent with other AP reporting, appears to show militants from the Islamic State group with truckloads of captured Iraqi soldiers after taking over a base in Tikrit. Iraq won the battle to retake the city of Tikrit from the Islamic State group, backed by a coalition of the unlikely in Iranian advisers, Shiite militias and U.S.-led airstrikes, but the country now faces what could be its most important battle: Winning the support of the Sunni. (AP Photo via militant website, File)
This undated file image posted on a militant website on Tuesday, Jan. 14, 2014 shows fighters from the al-Qaida linked Islamic State of Iraq and the Levant (ISIL) marching in Raqqa, Syria. Once a vibrant, mixed city considered a bastion of support for President Bashar Assad, the eastern city of Raqqa is now a shell of its former life, transformed by al-Qaida militants into the nucleus of the terror group's version of an Islamic caliphate they hope one day to establish in Syria and Iraq. In rare interviews with The Associated Press, residents and activists in Raqqa describe a city where fear prevails, music has been banned, Christians have to pay religious tax in return for protection and face-veiled women and pistol-wielding men in jihadi uniforms patrol the streets. (AP Photo/militant website, File)
In this May 26, 2015 photo, Bilal Abdullah poses for a portrait in the village of Eski Mosul in northern Iraq, nearly a year after Islamic State militants took over the village. In the Islamic State's realm, a document testifying that one has "repented" from a heretical past must be carried at all times and it can mean the difference between life and death. Abdullah learned that not long after the extremists took over his home village. (AP Photo/Bram Janssen)
In this Wednesday, May 27, 2015 photo, a girl holds a broom in the town of Eski Mosul, Iraq, which had been under the control of the Islamic State group for months. Most residents stayed in the town after it was liberated by Kurdish Peshmerga forces in January 2015. (AP Photo/Bram Janssen)
In this photo released on March 7, 2015 by a militant website, which has been verified and is consistent with other AP reporting, a member of the Islamic State group holds the IS flag as he dismantles a cross on the top of a church in Mosul, Iraq. (Militant website via AP)
In this photo released on Feb. 8, 2015 by a militant website, which has been verified and is consistent with other AP reporting, a member of Islamic State group's traffic police, right, writes a ticket to a driver, left, in Raqqa, Syria. Taxi drivers or motorists usually play the IS station on their radios - music, which is forbidden, can get the driver 10 lashes. (Militant website via AP)
In this photo released on May 4, 2015 by a militant website, which has been verified and is consistent with other AP reporting, people stand at the window of a media distribution point to receive CDs from Islamic State militants, right, in Mosul, Iraq. (Militant website via AP)
In this Sunday, May 17, 2015 photo, Sheikh Abdullah Ibrahim poses with his son while holding an Islamic State group-issued death certificate - all that he has left of his wife, Buthaina Ibrahim, an outspoken human rights activist and official, in the village of Eski Mosul, northern Iraq. There is no grave, no idea what was done with her body after the extremists took her from their home one night and killed her in a purge after overrunning the village north of Mosul, Iraq in June 2014. Given her government ties, IS fighters quickly demanded she apply for a repentance card. "She said she'd never stoop so low," her husband said. (AP Photo/Bram Janssen)
In this photo released on April 30, 2015 by a militant website, which has been verified and is consistent with other AP reporting, new recruits of the Islamic State train in Mosul, northern Iraq. (Militant website via AP)
In this photo released on Dec. 24, 2014 by a militant website, which has been verified and is consistent with other AP reporting, a member of the Islamic State group writes in Arabic, "we are a people whom God has honored with Islam," on a newly painted wall in Raqqa, Syria. (Militant website via AP)
In this Wednesday, May 27, 2015 photo, a resident sits on a hill overlooking the town of Eski Mosul, Iraq. The hole next to him is a former grave that was opened up by the Islamic State group militants and used as a sniper hideout. (AP Photo/Bram Janssen)
In this photo released on July 2, 2014 by a militant website, which has been verified and is consistent with other AP reporting, Iraqi men gather around Islamic State group officials to sign cards testifying that they have "repented" from their heretical past, in Mosul, northern Iraq. In a series of interviews by Associated Press journalists, former prisoners and residents who lived under IS rule describe how one of the richest, most sophisticated terrorist organizations in the world accumulates money, terrifies residents, indoctrinates children and buys loyalties. (Militant website via AP)
In this Wednesday, May 27, 2015 photo, Salim Ahmed, a former Iraqi Army member, holds the "repentance card" he received from the Islamic State group in June 2014 shortly after the militants took over his home village of Eski Mosul in northern Iraq. The document is part of the apparatus of control the Islamic State group has constructed across its self-declared "caliphate," the territory it conquered in Syria and Iraq. (AP Photo/Bram Janssen)
In this photo released on May 14, 2015 by a militant website, which has been verified and is consistent with other AP reporting, a member of the Islamic State group's vice police known as "Hisba," right, reads a verdict handed down by an Islamic court sentencing many they accused of adultery to lashing, in Raqqa City, Syria. (Militant website via AP)
In this photo released on Jan. 14, 2015 by a militant website, which has been verified and is consistent with other AP reporting, Islamic State militants kill a man they accused of being a homosexual by throwing him off a building in Syria's northeastern province of Hassakeh. In a series of interviews by Associated Press journalists, former prisoners and residents who lived under IS rule describe how one of the richest, most sophisticated terrorist organizations in the world accumulates money, terrifies residents, indoctrinates children and buys loyalties. (Militant website via AP)
In this photo released on March 7, 2015 by a militant website, which has been verified and is consistent with other AP reporting, a member of the Islamic State group destroys an icon of the Virgin Mary and Jesus on the wall of a church in Mosul, Iraq. In a series of interviews by Associated Press journalists, former prisoners and residents who lived under IS rule describe how one of the richest, most sophisticated terrorist organizations in the world accumulates money, terrifies residents, indoctrinates children and buys loyalties. (Militant website via AP)
In this photo released on Jan. 31, 2014 by a militant website, which has been verified and is consistent with other AP reporting, women in niqabs - enveloping black robes and veils that leaves only the eyes visible - sew niqabs, which are required for women in Islamic State-held territory, in a factory in Mosul, Iraq. (Militant website via AP)
In this photo released on Feb. 10, 2015 by a militant website, which has been verified and is consistent with other AP reporting, two Syrian citizens, right, sit in the office of an inheritance judge of Islamic State group, in the town of al-Tabqa in Raqqa City, Syria. (Militant website via AP)
In this photo released on April 17, 2015 by a militant website, which has been verified and is consistent with other AP reporting, a member of the Islamic State group's vice police known as "Hisba," patrols a market in Raqqa City, Syria. The Arabic words on the vest read, "The Islamic State - Hisba (vice police)." (Militant website via AP)
In this photo released on Feb. 10, 2015 by a militant website, which has been verified and is consistent with other AP reporting, two women sit in the office of an Islamic State group judge, center, at an Islamic court in al-Tabqa town in Raqqa City, Syria. (Militant website via AP)
In this photo released on January 31, 2014 by a militant website, which has been verified and is consistent with other AP reporting, members of the Islamic State group, left, distribute niqabs, enveloping black robes and veils that leave only the eyes visible, to Iraqi women in Mosul, northern Iraq. In areas controlled by the Islamic State group in Iraq and Syria, women must not only be covered, but usually are required to wear all black, with flat-soled shoes; for men, Western clothes or hair styles _even hair gel _ can draw suspicion. (Militant website via AP)
of
SEE ALL
BACK TO SLIDE
SHOW CAPTION +
HIDE CAPTION

The Times also provided some specific examples of how ISIS runs this operation inside its territory:

  • In a neighborhood in Mosul, Iraq, ISIS has transformed a police station into a market and charges vendors 2.8 million Iraqi dinars, or roughly $2,500, per year to rent a stall.
  • In ISIS' de-facto capital of Raqqa, Syria, the "Office of Services" collects a "cleaning tax" of about 2,500 to 5,000 Syrian pounds, or about $7 to $14, from merchants.
  • ISIS also charges for utilities like water and electricity, and residents go to "collection points" to pay their bills. Those usually total about 800 Syrian pounds, or roughly $2.50, for electricity, and 400 pounds, or about $1.20, for water.
  • ISIS' "Office of Resources" controls the group's oil and smuggling operations, in addition to businesses like soft-drink plants, mobile-phone companies, textile and furniture workshops, and factories that produce chemicals, cement, and tiles.
  • ISIS also skims revenue from small businesses, demanding a cut of their profits.
  • ISIS charges an income tax of about 10%.
  • ISIS imposes various fines and fees for services or infractions including car-registration, college textbooks, traffic violations, and smoking.

And the money ISIS makes from extortion comes in addition to revenue it is gaining from oil smuggling (estimated to bring in about $500 million), looting banks (which brought the group a one-time windfall of $1 billion), and kidnapping. The group also smuggles antiquities to sell on the black market.

Though extortion and taxation is bringing in plenty of money for ISIS in the short term, it may not sustainable in the long run.

The Times reported in a separate story this week that ISIS' statehood project is under serious strain. The group is scrambling to recruit professionals who can operate oil equipment, keep the electricity running, and perform medical care.

Without these basic necessities, it's likely that residents will continue fleeing ISIS territory for Europe and surrounding countries, which could leave fewer people inside ISIS-controlled cities and towns for the group to tax.

Daveed Gartenstein-Ross, a counterterrorism analyst at the Foundation for Defense of Democracies, told Business Insider in September that Muslims are fleeing ISIS territory "in droves" as the group falls short of promises to provide satisfactory government services.

Residents fleeing is enough of a problem that ISIS released a barrage of propaganda earlier this year targeting refugees and telling them to come join the "caliphate" instead of fleeing to "xenophobic" Europe.

And people are already struggling to pay ISIS' heavy taxes. ISIS is thought to have imposed taxes of as much as 50% on the salaries of government employees, which led the Iraqi government to stop paying people who live in ISIS-controlled territory, according to Newsweek.

More from Business Insider:
Eye-popping statistic shows how much the US is going it alone in the fight against ISIS
'It's similar to North Korea': Inside ISIS's sophisticated strategy to brainwash people in the 'caliphate'
2 days after massive terror alert, Obama says there's no 'credible' threat to US

Read Full Story

Sign up for Breaking News by AOL to get the latest breaking news alerts and updates delivered straight to your inbox.

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners