“[Islamic State’s] criminal activities—robbery, extortion, and trafficking—have helped the organization become the best-funded terrorist group in history,” the senators wrote. “This wealth has helped expand their operational capacity and incentivized both local and foreign fighters to join them.”
Islamic State is an offshoot of al-Qaeda in Iraq. Islamic State’s extreme viciousness led al-Qaeda to cut ties with it. According to Thomas Joscelyn, senior fellow at the Foundation for Defense of Democracies (FDD), most of al-Qaeda’s deep-pocketed, Gulf-based terrorism financiers remained with the parent organization, forcing Islamic State to adopt unorthodox fundraising methods.
The main source of funding comes from the fact that Islamic State sells oil on the black market. That’s the number-one source of income. The number-two source of Islamic State’s income is its extortion rackets in towns it runs —and it runs a few, including Raqqa in Syria and Mosul in Iraq, which are both fairly large Arab cities.”