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According to US officials’ estimates, the Islamic State generates an income of $1 million a day from black market oil sales, which the extremists extract from territory they control in Iraq and Syria, as well as other sources of financing like bank robberies, looting of antiquities, human trafficking and extortion of local businesses and persons, RIA Novosti reports.

“With the important exception of some state-sponsored terrorist organizations, ISIL is probably the best-funded terrorist organization we have confronted,” Treasury Undersecretary for Terrorism and Financial Intelligence David Cohen said, according to a statement by the US Treasury Department. The data further suggests that external sources of funding play only a minor role in sustaining the terrorist organization.

The currently available methods of preventing the funding of international terrorism are not applicable is the case of the Islamic State, Mr. Cohen said, as the militants do not move money across national borders. “ISIL derives a relatively small share of its funds from deep-pocket donors, and thus does not, today, depend principally on moving money across international borders. Instead, ISIL obtains the vast majority of its revenues through local criminal and terrorist activities,” he said. This means the international community has to introduce new measures to undermine the organization’s finances.

The Islamic State sells oil "at substantially discounted prices” on the black market via middlemen in Turkey, Iraqi Kurds and the Syrian government of President Assad, said the US Treasury. The militants produce and sell roughly 10,000 bpd of oil, “[controlling] oil refineries of various sizes and output capacities, and [earning] some revenue from the sale of refined petroleum products,” Mr. Cohen noted. Whilst US-led airstrikes have shown some efficiency in disrupting the IS-controlled oil supply network, the coordinated efforts of Turkey, the Kurdistan Regional Government and the US have led to a dramatic slump of ISIL’s oil supply.

The militants have earned about $20 million this year in exchange for kidnapped civilians. “For ISIL, these ransom payments are irregular, but each one can be a significant boon. This spring, ISIL released captured journalists and other hostages from several European countries. In return, according to press reports, ISIL received several multi-million dollar payments,” Mr. Cohen said.

The Islamic State also extorts businesses in the territory it controls. They also sell everything they can, from looted antiquities to livestock to grains to humans as “they sell abducted girls and women as sex slaves,” expressed Mr. Cohen. IS also has sources of external funding and “maintains important links to financiers in the Gulf, as a spate of Treasury designations last month made clear,” he added.

The US Treasury says that the terrorist organization is vulnerable to airstrikes because of its “desire to act like the government of a state.” The militants have gone as far as providing services like water and electricity to the local population.

The measures proposed by the US Treasury to cut IS financing and restrict its access to the international financial system include the imposition of sanctions against militant leaders and other affiliates. Simultaneously, airstrikes will continue in order to further disrupt the organization’s economic infrastructure.

“Cutting off one key source of funds will require dislodging it from territory in which it operates,” Mr. Cohen concluded. “But even as this vital military campaign progresses, we recognize that the only solutions are political in nature. The hateful ideology propagated by ISIL must be countered by tolerant, economically vibrant societies and governments that rule in an inclusive manner.”