On December 21, the Washington Post reported that according to intelligence officials and terrorism experts, the Islamic State, despite the loss of its caliphate, “is sitting on a mountain of stolen cash and gold that its leaders stashed away to finance terrorist operations and ensure the organization’s survival years into the future.” This horde of cash and gold – “nearly all of it looted from banks or acquired through criminal enterprises” – is estimated to be about $400 million.
This larder of cash and gold, according to analysts, “is partly intended . . . to fund a future resurgence of the Islamic State . . . .” While some of this total reportedly was buried in the desert or hidden away, officials said that Islamic State leaders ”have laundered tens of millions of dollars by investing in legitimate businesses throughout the Middle East over the last year.” Investigators recently traced millions of Islamic State-linked dollars “through banking networks with links to Turkey and the United Arab Emirates as well as Iraq and Syria.” Moreover, those funds led “to an astonishing array of legitimate commercial enterprises, including real estate companies, hotels and automobile dealerships,” and even shares in a carwash business. One analyst was quoted as saying that that there were indications of people “’moving money through cutouts and proxies into correspondent banks, mostly in southern Turkey’.”
In addition, the article reported that one Iraq-based financial services business, the al-Rawi Network, reportedly “moved up to $500,000 a day to operatives in Turkey.” In October 2018, Iraqi commandos and Kurdish counter-terrorism forces arrested ten members of the network.
Note: It should be no surprise to anti-money laundering compliance officers that the Islamic State continues to seek to launder funds in the EMEA region to support their activities. The U.S. Department of the Treasury has sanctioned a key individual and three money services businesses for moving Islamic State funds: in 2016, financier Fawaz Muhammad Jubayr al-Rawi (later killed in Syria), and two currency exchanges in Iraq and Syria; and in 2018, another Iraq-based money services business.
This article indicates that AML compliance teams need to remain attentive to indications that funds flowing through their own institutions or correspondent banks are linked to the Islamic State. They should read the article for the strategic information that it contains, and monitor open-source reporting in the new year for updated reporting on Islamic State laundering.