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

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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:

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ISIS has found a huge money-making method that is 'impervious to sanctions and air raids'
A civilian woman carries her child during a battle with Islamic State militants, east of Mosul, Iraq, January 10, 2017. REUTERS/Azad Lashkari
Civilians walk past Iraqi Special Operations Forces (ISOF) during a battle with Islamic State militants, east of Mosul, Iraq, January 10, 2017. REUTERS/Azad Lashkari
A displaced man, who fled the Islamic State stronghold of Mosul, carries a woman in the Mithaq district of eastern Mosul, Iraq, January 3, 2017. REUTERS/Thaier Al-Sudani TPX IMAGES OF THE DAY
Smoke rises from clashes during a battle with Islamic State militants in the Mithaq district of eastern Mosul, Iraq, January 3, 2017. REUTERS/Thaier Al-Sudani
An Iraqi soldier is seen during a battle with Islamic State militants, north of Mosul, Iraq, December 30, 2016. REUTERS/Khalid al Mousily
Iraqi people flee the Islamic State stronghold in the town of Bartella, east of Mosul, December 28, 2016. REUTERS/Ammar Awad TPX IMAGES OF THE DAY
Iraqi people flee the Islamic State stronghold in the town of Bartella, east of Mosul, December 28, 2016. REUTERS/Ammar Awad
Iraqi rapid response forces cook food in their headquarters during the war against the Islamic state militants east of Mosul, Iraq, December 21, 2016. REUTERS/Khalid al Mousily
Mohammad Hassan, whose hand was chopped off by Islamic State militants, sits outside a house at Nimrud village, south of Mosul, Iraq, December 13, 2016. Picture taken December 13, 2016. REUTERS/Mohammed Salem
Displaced Iraqi boys, who fled the Islamic State stronghold of Mosul, warm themselves by a fire in Khazer camp, Iraq,December 15, 2016.REUTERS/Ammar Awad
Displaced Iraqi woman, who fled the Islamic State stronghold of Mosul, bids her relatives farewell as she leave Khazer camp to go home, Iraq December 10, 2016.REUTERS/Ammar Awad
Iraqi Christians come to visit the heavily damaged Church of the Immaculate Conception after Iraqi forces recaptured it from Islamic State in Qaraqosh, near Mosul, Iraq, December 9, 2016. REUTERS/Ammar Awad
An Iraqi father (L) mourns the death of his son, who was killed during clashes in the Islamic State stronghold of Mosul, in al-Samah neighborhood, Iraq December 1, 2016. REUTERS/Mohammed Salem
An Iraqi girl, who was wounded during clashes in the Islamic State stronghold of Mosul, lies on a bed at a field hospital in al-Samah neighborhood, Iraq December 1, 2016. REUTERS/Mohammed Salem
Displaced people who fled the clashes transfer to camps during a battle with Islamic State militants in Mosul, Iraq, November 30, 2016 REUTERS/Alaa Al-Marjani
A member of the Iraqi Special Operations Forces (ISOF) gestures in military vehicle during a battle with Islamic State militants in Mosul, Iraq, November 30, 2016 REUTERS/Alaa Al-Marjani TPX IMAGES OF THE DAY
A man gestures as other men sit on the ground as an Iraqi Special forces intelligence team check their ID cards as they search for Islamic State fighters in Mosul, Iraq November 27, 2016. REUTERS/Goran Tomasevic
Two men hold hands as an Iraqi Special forces intelligence team searches for Islamic State fighters in Mosul, Iraq November 27, 2016. REUTERS/Goran Tomasevic
Oilfields burned by Islamic State fighters are seen in Qayyara, south of Mosul, Iraq November 23, 2016. REUTERS/Goran Tomasevic TPX IMAGES OF THE DAY
Boys stand in front of oilfields burned by Islamic State fighters in Qayyara, south of Mosul, Iraq November 23, 2016. REUTERS/Goran Tomasevic
Civilians flee fighting between Iraqi forces and Islamic State fighters in Mosul, Iraq, November 20, 2016. REUTERS/Goran Tomasevic TPX IMAGES OF THE DAY
Smoke rises from clashes during a battle with Islamic State militants at the airport of Tal Afar west of Mosul, Iraq November 18, 2016. REUTERS/Thaier Al-Sudani
A member of Shi'ite fighters carries a weapon during a battle with Islamic State militants at the airport of Tal Afar west of Mosul, Iraq November 18, 2016. REUTERS/Thaier Al-Sudani
A displaced woman from the outskirts of Mosul covers herself in a blanket in the town of Bashiqa, after it was recaptured from the Islamic State, east of Mosul, Iraq, November 18, 2016. REUTERS/Khalid al Mousily
A girl attends classes after the city was recaptured from the Islamic State militants in Qayyara, Iraq, November 17, 2016. REUTERS/Ari Jalal
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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

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