Analytic Memo 9: Logistics and Financing of ISIS
- Darius Anderson
- Sep 15
- 3 min read
by Dack Anderson, Lead Security Consultant
As part of my academic journey at Pikes Peak State College, I had the opportunity to study ESA4010: Terrorism Threat & Risk Analysis in 2022, a critical course that deepened my understanding of terrorism-related threats, emergency response strategies, and analytical methods. Under the guidance of Professor Woody Boyd, I conducted extensive research using structured assessment models to analyze whether ISIS remains a threat to the United States.
This ninth annex explores the Islamic State’s logistics and financing infrastructure, examining how the group gathers resources, sustains its operations, and leverages technology to remain viable. Despite battlefield defeats and international sanctions, ISIS has proven itself to be intelligent, malleable, persistent, and pervasive. By adapting its financial and logistical strategies, ISIS seeks to exploit vulnerabilities in the global system.
Key Findings
To better understand ISIS’s logistics and financing capabilities, we must take a systematic view of how the organization operates, how sustainable its methods are, and what technologies support its marketability.
Past U.S. actions have targeted five companies and four individuals across Syria, Turkey, the Persian Gulf, and Europe for providing logistical and financial support to ISIS (Bussoletti, 2019). While Saudi Arabia has publicly committed to countering ISIS, concerns remain about potential duplicity in its support for Islamic movements (Boghardt, 2014).
At that time, ISIS reportedly spent approximately $80 million annually, with nearly half allocated to member salaries and the remainder supporting its dispersed encampments. The group operates through a “crime-terror nexus,” combining criminal enterprises with terrorist activities to generate revenue (Blannin, 2017). These include:
Money laundering through cutouts and layering
Cash smuggling and extortion (“taxation”)
Kidnapping, robbery, and counterfeiting (currency and pharmaceuticals)
Protection racketeering and smuggling of oil, weapons, and people
Bartering stolen antiquities for weapons, drones, and technology (Almohammad & Speckhard, 2017)
Sustainability
According to Dimitrios Stergiou (2016), ISIS functioned as a “self-funded State Scale Entity” but lacks the economic durability to sustain a true proto-terror state. Military defeats and financial crackdowns have severely restricted its income flow. Blannin (2017) further argues that ISIS’s funding sources are not renewable, making long-term sustainability unlikely.
Technology
ISIS maintains a robust online presence, using it to wage cyber-terror, distribute propaganda, and solicit anonymous donations. Its magazines, Dabiq and Rumiyah, are published in multiple languages. The group has also tapped into cybercrime and cyber espionage, coaching supporters on using cryptocurrencies and anonymous “dark wallets.” Cyber battalions like the United Cyber Caliphate (UCC) and the Islamic State Hacking Division (ISHD) encourage lone-wolf attacks and engage in financial scams targeting foreign pensioners (Blannin, 2017).
Meaning of Findings
ISIS has evolved to include criminal activities as a core component of its financing strategy. While battlefield losses have weakened its traditional support networks, the digital age has extended its operational life. Through manipulative propaganda, nameless donors, and cyber-criminality, ISIS continues to adapt and exploit emerging technologies.
Assessment of Findings
Military action alone was insufficient to defeat ISIS. As we advance deeper into the technological twenty-first century, counterterrorism efforts must prioritize cyber capabilities. ISIS has demonstrated proficiency in crowdfunding, identity fraud, shell company creation, and tax evasion. These skills not only fund its operations but risk being shared with other criminal and terrorist groups. A comprehensive strategy, one that includes financial disruption, cyber defense, and international cooperation, is essential to countering this persistent threat.
References:
Almohammad, A., & Speckhard, A. (2017, May 4). ISIS Drones: Evolution, Leadership, Bases, Operations and Logistics. Retrieved from ResearchGate: https://www.researchgate.net/profile/Anne-Speckhard/publication/316679605_ISIS_Drones_Evolution_Leadership_ Bases_ Operations_and_Logistics/links/ 590be9a7458515b7c61e3425/ISIS-Drones-Evolution-Leadership-Bases-Operations-and Logistics.pdf
Blannin, P. (2017, May). Islamic State’s Financing: Sources, Methods and Utilisation. Retrieved from JSTOR: https://www.jstor.org/stable/26351519#metadata_info_tab_ contents
Boghardt, L. P. (2014, June 23). Saudi Funding of ISIS. Retrieved from The Washington Institute: https://www.washingtoninstitute.org/policy-analysis/saudi-funding-isis
Bussoletti, F. (2019, November 20). Terrorism, the US hit Isis’ financial and logistic network. Retrieved from Difesa & Sicurezza (Defense and Security): https://www.difesaesicurezza.com/en/defence-and-security/terrorism-the-us-hit-isis financial-and-logistic-network/
Stergiou, D. (2016, May 3). ISIS political economy: financing a terror state. Retrieved from Emerald Insight: https://www.emerald.com/insight/content/doi/10.1108/JMLC-06-2015 0021/full/html
U.S. Department of the Treasury. (2019, April 15). Treasury Designates Key Nodes of ISIS’s Financial Network Stretching Across the Middle East, Europe, and East Africa. Retrieved from U.S. Department of the Treasury Press Releases: https://home.treasury.gov/news/press-releases/sm657
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