Speaking to a UK parliamentary subcommittee on ISIS’s revenue, Chatham House economist David Butter said official estimates of ISIS getting 40% of its revenue from the oil trade are “over-inflated” and that the group is actually using trade in Iraq’s foreign exchange market as a major source of revenue.
Last month, reports were emerging detailing how ISIS was using US airstrikes against US currency in their territory to inflate their own official exchange rate for profit. It turns out this was just the tip of the iceberg, as ISIS is also heavily involved in the trade of Iraqi dinars not just in their own city of Mosul, but also in Jordan, and Baghdad.
Heavily state-controlled exchange auctions, combined with the informal hawala system, allows ISIS to easily move currency around the region, and take advantage of imbalances in the rate of exchange for dinars. ISIS is estimated to bring in $20-$25 million a months on the scheme.
Butter urged Britain to work with Iraq, and in particular to watch the foreign exchange auctions very closely, but conceded that there is no “magic wand” for stopping ISIS from what it’s doing. Far from being focused solely on taxation and oil revenue, ISIS seems to be finding all sorts of novel ways to make money.