The falling oil prices that are devastating Canada’s economy are also hurting ISIL, but it’s unclear if the commodity’s decline will spell an end to the murderous terrorist group that’s behind the Paris attacks.
“Operating in large swathes of territory in eastern Syria and western and northern Iraq allows ISIL to control numerous oilfields from which it continues to extract oil for its own use, its own refining and for onward sale or swap to local and regional markets,” according to the international Financial Action Task Force (FATF), of which Canada is a member.
In a February report, the FATF estimated that ISIL was selling crude at source for a deeply discounted $25-$30 per barrel to middlemen, who then marked it up to $60-$100 per barrel (bbl).
“We note that during the preparation of this report, there has been a substantial decline in global crude oil prices (from approximately $80USD/bbl to $50USD/bbl), and so the price at which ISIL sells crude oil (and the revenue generated from the sale of crude oil) has likely declined as well,” the report said.
Oil closed at $42.08 per barrel on Monday.
But experts differ over exactly how much of ISIL’s money comes from oil.
The FATF said oil is diminishing in importance relative to other sources of revenue.
One reason is ISIL lacks the equipment, expertise or manpower required to produce petroleum — they use crude methods to extract crude, and thus yield only “a fraction” of the potential output of the oilfields under their control.
Coalition airstrikes, in which Canada has participated, have further degraded ISIL’s access to oilfields and to facilities where they can refine the crude into other products for sale, FATF said.
But a report in September from RBC Capital Markets warned ISIL’s oil money was still flowing despite the U.S.-led coalition’s efforts.
“Currently around 6.5 million people live in ISIS-held territory in Iraq and Syria and the exploitation of energy assets has provided a key source of funding for their fledgling state. ISIS reportedly earns $8-$10 million a month from the sale of oil from fields it controls in eastern Syria and northern Iraq,” the report said.
Last Friday, the same day as the Paris carnage, U.S. Col. Steve Warren said the coalition has “stepped up” Operation Tidal Wave II — the operation that specifically targets ISIL’s oil revenues — since Oct. 21.
“We have attacked ISIL’s ability to fund their operations through stolen oil from the beginning of this campaign,” Warren said in a Department of Defense briefing.
Strikes were carried out Tuesday on four more oil targets.
The money trail
But the focus should be less on ISIL’s cash-only black market trade and instead be on its trackable revenue streams, one expert says.
“Where we can get (ISIL) is they have bank accounts,” Christine Duhaime, a lawyer who specializes in terror financing and money laundering, tells Yahoo Canada News. “The next best thing, or the better thing, is not letting them bank any proceeds from that criminal activity.”
That’s where FINTRAC comes in.
The Financial Transactions and Reports Analysis Centre of Canada collects intelligence on financial transactions suspected to be linked to money laundering or terrorism financing and shares relevant information with law enforcement agencies.
“This intelligence allows us to establish links between individuals and groups in Canada and abroad that support terrorist activities, thereby allowing us to detect the financing of these activities,” director Gérald Cossette told the House of Commons Standing Committee on Finance in March.
For instance, FINTRAC’s information aided the RCMP in its investigation into the International Relief Fund for the Afflicted and Needy Canada (IRFAN-Canada), which ultimately had its charity status stripped for its alleged ties to the terrorist group Hamas. FINTRAC also helped police nab two men who plotted to derail a VIA passenger train travelling from New York to Toronto.
The agency receives about 20 million reports each year from financial institutions. In the year ending March 2015, FINTRAC provided 1,143 disclosures, 234 of which were related to terrorism financing — or, as Cossette pointed out, more than one per business day.
They’re looking for, among other things, transactions that could be connected to Foreign Terrorist Fighters (FTFs), who raise money locally to travel overseas to join ISIL, or who transport or transfer money to ISIL — something the FATF says continues to be “a relatively small but important source of funding” for the organization. The FATF estimates that 70 FTFs originated from Canada.
Still, Canada can only do so much, Duhaime says.
“There are countries, and banks in those countries, that are not doing their part,” she says, referring specifically to ISIL territory. “We’re not doing enough to pressure Syria and Iraq to shut down banks there.”
Duhaime says the small banks in Syria and Iraq rely on the bigger banks, which in turn rely on foreign and central banks. The rest of the international community is falling short on its pledge to follow the money.
“If it all worked, there would be no (ISIL), they couldn’t open up a bank account. But now that they’re thriving and very rich, we need to go back and put pressure on those laws that exist,” Duhaime says. “If we were to do that, we’d be a lot further ahead.”