The United Nations Security Council has unanimously adopted a resolution Thursday to combat terrorism financing, co-sponsored by the United States and Russia.
It was the first time in its 70-year history that finance ministers huddled in the Security Council, an event U.N. Secretary-General Ban Ki-moon called “historic” in his remarks.
The resolution elevates the Islamic State to the same sanctions category as al Qaeda. It also calls on countries to report the steps they’re taking to combat terrorist financing and to criminalize that financing, even if it’s not pinned to a specific terrorist act.
But a big part of the U.N. resolution is about better sharing of information, both across governments and with the private sector, said Adam Szubin, the acting under secretary for terrorism and financial intelligence at the U.S. Treasury.
“That doesn’t sound sexy, but I can tell you, after 11 years of working on terrorist finance issues, that’s where we tend to catch the bad guys,” Szubin said. “It’s financial flows and following those flows, picking up on the financial trail. You don’t do that if we’re not sharing the information.”
ISIS derives much of its funding from the terrority controls, largely from the sale of oil and looted antiquities and “taxes” levied on the people who live there. That self-sufficiency makes it a difficult target.
However, ISIS also burns through a great deal of cash — whether providing services like sewage and trash removal in its territories or paying its tens of thousands of soldiers.
“When you add it all up they’re taking on a massive amount of expenditures in a way that a group like al Qaeda never did,” said Szubin, adding those expenditures make the group vulnerable.
“ISIL’s narrative is that they’re building the Islamic caliphate,” he said. “Obviously, it’s a perverted narrative, but it is central to them in how they represent themselves, how they attract followers and recruits, and how they try to sustain their position in the territory that they’ve captured.”
And while ISIS operates largely outside the traditional financial system, it can’t avoid it entirely.
“Think about their oil infrastructure,” said Szubin. “Especially under this stepped-up military campaign, they’re going to need to replace parts. They’re going to need to obtain technology. They can’t get that from within the territory they control.”
This is the first time finance ministers have met at the Security Council, but there have been resolutions on terror financing before.
Since ISIS’s funding comes from activities “largely things beyond the control of finance ministers,” said Matthew Levitt, director of the Stein Program on Counterterrorism & Intelligence at the Washington Institute for Near East Policy. “The best tool we have at our disposal to deal with them right now is the military tool targeting oil-related infrastructure and pushing back Islamic State’s control of territory.”
Even still, Levitt said adding ISIS to the al Qaeda sanctions list means “fewer people, fewer countries will be able to say, well, maybe it doesn’t apply, maybe I don’t have to take action.”
He also saw opportunity in better communication between governments and financial institutions.
“If governments don’t provide them enough information of what to look for, then they’re left in the dark” he explained. “Sometimes what they do is over file and send reports about anything that could be the least suspicious, which is not helpful to government because then you can drown in over-reporting.”
Thursday’s action is a small step forward in a campaign against ISIS that’s been primarily driven by the military, said Louise Shelley, director of the Terrorism, Transnational Crime and Corruption Center at George Mason University. But she’s doubtful this resolution will be able to stem the significant revenue ISIS receives by smuggling of oil to neighboring states, like Syria, Turkey and Iraq.
“These are long-standing smuggling routes and there are high-level officials in many of these countries that are behind these smuggling routes,” she said.
Moreover, she thinks the international community still has a long way to go to be able to analyze and stem sources of terrorist financing.
“It’s a very complex method of financial and network analysis that the international community is far from capable of doing on a significant scale at the moment,” she said.