	Introduction

The Islamic State, also known as ISIL or ISIS, has been described by senior U.S. officials as one of the best-funded terrorist organizations. In other cases, IS control over a set of resources is notable not solely for the revenue the group derives from it, but also for the extent to which it limits the ability of the Iraqi and Syrian governments to conduct trade, provide utility services, or feed its citizens. U.S. policy to counteract IS financing has concentrated on three primary areas: disrupting the group's main sources of funding, restricting its access to the international financial system, and imposing sanctions on its senior leadership and financial facilitators. To date, the Obama Administration has not requested new authorities from Congress specifically to counter IS financing. The Islamic State has encouraged followers to conduct lone-wolf attacks in Europe and the United States. For additional information on the Islamic State and the U.S. response, see CRS Report R43612, The "Islamic State" Crisis and U.S. Policy , by [author name scrubbed] et al. As a result, official exports have fallen to zero, and Syria has become a net importer of petroleum products. The Turkish border region also is a conduit for the sale of illicit Iraqi oil, both by the Islamic State, which holds several small fields in Iraq, and by the Kurds. In January 2015, U.S. Secretary of State John Kerry stated that coalition strikes had destroyed nearly 200 oil and gas facilities used by the Islamic State. It is difficult to assess which of the Islamic State's revenue streams is the largest, in part because of the limited financial details that are publicly available, the group's adaptation to shifting circumstances and opportunities, and the different ways that observers combine or disaggregate individual revenue streams when calculating their share of the group's overall income. The Islamic State requires individuals wishing to do business in its territory to pay a percentage of their earnings to the group. Policy Tools and Issues

In addition to military strikes against revenue-generating targets like oil facilities, as part of the Obama Administration's strategy to "degrade and ultimately defeat" the Islamic State, the U.S. Department of the Treasury leads U.S. government efforts to apply financial measures that will undermine the group's finances. Oil Sales. Foreign Fighter Fundraising. Although the extent to which the Islamic State relies on banks remains unclear, observers suggest that efforts to restrict local banks from access to the international financial system may not affect the Islamic State's ability to leverage and exploit banks within IS-controlled territory. Replenishing battlefield resources, including equipment repairs and salaries for fighters, along with other costs associated with administering territory under its control, may ultimately stress its financial capabilities. Congressional Outlook

As the 114 th Congress continues to consider and evaluate U.S. policy responses to address the Islamic State, a focus of concern may center on whether U.S. counterterrorist financing tools are capable of diminishing IS sources of funds. Key questions may include whether current U.S. efforts are effective and sufficiently resourced, or require new legislative authorities, to respond to the Islamic State's ability to accumulate and distribute funds.
Countering the financial resources of the Islamic State, which has seized significant territory in Iraq and Syria and threatened to conduct attacks against the United States and its citizens, has become a significant national security priority for policymakers, including Members of Congress. By undermining the financial strength of the group, also known as ISIL or ISIS, policymakers seek to reduce its capability to conduct terrorist attacks, as well as to ultimately "degrade and ultimately destroy" the group. This effort includes a comprehensive look at how the group generates revenue.
While IS funding streams remain fluid, the group's largest revenue sources appear (based on open-source information) to include oil sales, taxation and extortion, and the sale of looted antiquities. Oil sales initially provided the majority of the group's revenue, but gradually declined as a percentage of overall IS profits due to an extensive campaign of airstrikes by the United States and coalition partners against oil and gas facilities used by the group.
U.S. officials have noted that the Islamic State's financial strength depends not only on its income but also on its expenses, and the extent to which it is able to devote its resources to military operations. U.S. officials have stated that the Islamic State's decision to hold and govern territory is a financial burden for the group, and thus a vulnerability that the United States could potentially exploit by diminishing the group's ability to generate and utilize revenue. If the Islamic State cannot afford the expenses associated with governing its territory, some argue that the resulting public backlash would undermine its ability to rule.
Along with military strikes, the United States, in cooperation with regional allies, has implemented a series of financial measures designed to block the Islamic State's access to the international financial system. Without such access, the Islamic State will likely struggle to fund external operations, including facilitating the movement of foreign fighters. However, significant challenges remain, as the Islamic State has thus far been able to limit its direct exposure to the international financial system by generating and spending money largely within territory under its control. U.S. efforts are centered on identifying new ways to target the group's finances by focusing both on the Islamic State and on others who conduct business with the group.
To date, the Administration has not requested new authorities specifically to counter IS financing. As the 114th Congress continues to consider and evaluate U.S. policy responses to address the Islamic State, a focus of concern may center on whether U.S. counterterrorist financing tools are capable of diminishing IS sources of funds. Key questions may include whether current U.S. efforts are effective, sufficiently resourced, or require new legislative authorities to respond to the financial threat that the Islamic State presents.
For additional information on the Islamic State and the U.S. response, see CRS Report R43612, The "Islamic State" Crisis and U.S. Policy, by [author name scrubbed] et al.