A Look At How The Islamic State Banking Network Works

A stretch of storefronts at the Grand Bazaar of Istanbul, where money-exchange offices help move cash in and out of Islamic State-held territory in Iraq and Syria. PHOTO: NICOLE TUNG FOR THE WALL STREET JOURNAL

Wall Street Journal: How Islamic State’s Secret Banking Network Prospers

Money-exchange offices in Iraq, Syria, Turkey and Jordan funnel millions of dollars daily in and out of militant-held territory.

More than a year of U.S.-led airstrikes and financial sanctions haven’t stopped Islamic State from ordering supplies for its fighters, importing food for its subjects or making quick profits in currency arbitrage.

This is because of men such as Abu Omar, one of the militant group’s de facto bankers. The Iraqi businessman is part of a network of financiers stretching across northern and central Iraq who for decades have provided money transfers and trade finance for the many local merchants who shun conventional banks.

When Islamic State seized control of the region in 2014, the world’s wealthiest terror group made him an offer he decided not to refuse: You can keep your business if you also handle our money.

“I don’t ask questions,” said Abu Omar, whose money-exchange offices in the Iraqi cities of Mosul, Sulimaniyah, Erbil and Hit charge as much as 10% to transfer cash in and out of militant territory—twice normal rates. “Islamic State is good for business.”

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WNU Editor:The hawala banking system has been around for centuries .... shutting it down is not going to happen overnight .... if ever.