How Do Terror Groups Finance Their Operations?

On the evening of Tuesday, the 3rd of February, hundreds of attackers from the terrorist group Boko Haram descended on two Nigerian villages, Waro and Nuku. For weeks, the group had sent letters to the villagers, first informing the leadership that they would be coming to preach their version of Sharia law.

Then, when the village leaders asked for soldiers to be deployed, they sent warning letters containing exactly what you would expect a warning letter from a jihadist group to contain.

When the soldiers were eventually withdrawn, Boko Haram struck, sending hundreds of fighters carrying everything from AK-47s to explosives and even pump-handled shotguns. Then, the killing began. Over the next few hours, houses were burned, passing cars attacked, and between 100 and 200 villagers were killed.

It was one of the deadliest massacres in Nigeria's history, and it exposed the limits of the government's counterinsurgency approach. For our video today, though, it also highlights a really uncomfortable question. How was Boko Haram able to sustain such a large fighting force?

Because for them to be able to deploy hundreds of fighters to two tiny villages, they'd need a lot of fighters, all of whom would expect to be clothed, fed, trained, armed, even paid. And it's not just Boko Haram. From Janim in the Sahel to the Houthis in Yemen via the ELN in Colombia, terror groups have to get their money from somewhere.

The question is, where's it come from? Death and taxes Now, look, before we get into the weeds of this, we need to make one thing clear. Terrorism doesn't have to be expensive for it to be effective.

David Schloss, a cybersecurity executive who previously worked in the military in a counterterrorism role, told the front team in an exclusive interview that while big attacks such as 9-11 could cost as much as half a million dollars, most attacks could easily be carried out for well within the four-figure range.

Which means that terrorists don't necessarily need to raise a lot of money to be dangerous, especially in African countries where a dollar can go much further than it can in the West. For groups like Boko Haram, one of the most important sources of revenue is taxes from the areas they control.

Once a group holds territory for long enough, it starts behaving like a government. It sets up checkpoints, appoints its own local administrators, and tells residents what they owe for the privilege of doing business and not getting shot.

An investigation by the New Humanitarian in 2025 found that a Boko Haram faction, the Islamic State West Africa province, ISWAP, administered three broad categories of taxation, Zakat, Haraji, and Dariib, in several areas of northeastern Nigeria.

Zakat is usually collected from livestock-owning farmers, and it ranges from 3.3% to 1%, depending on the number of animals an individual has.

ISWAP has such a sophisticated system that instead of taking cattle from farmers, it collects the cash equivalent based on a predetermined market value, eliminating the possibility of herders undervaluing their livestock. The group, however, does take sheep and goats, reportedly for festive occasions, and for feeding their troops.

Zakat can bring in as much as $3.7 million a year.

Haraji, on the other hand, refers to the payments made by non-residents who enter ISWAP, controlled territories temporarily for work purposes non-residents usually pay an entry fee permit to be allowed into the area about 13 according to the new humanitarian investigation and while that might not sound like a lot iswap can generate around 156 000 from entry

Permits alone haraji also encompasses the separate taxes on the economic activity that the non-residents conduct it's primarily paid by people in the fishing industry as they're the ones who mainly travel to iswap controlled areas for work and can generate as much as 183 million dollars for the group and then finally there's darayib which the new

Humanitarian described as a more flexible and arbitrary form of taxation that is levied when the group needs more money than what has been collected from zakat at haraji and unlike the other taxes that are levied on specific individuals darayib is paid by everyone including iswap leadership and can generate as much as 4.8 million dollars for the group zakat

And haraji provide iswap with a consistent source of revenue while darayib gives the financial flexibility to fund major operations or urgent expenditures such as weapons procurement or medical supplies and while it is an important source of funding it is also extremely controversial because unlike the first two which have classical islamic justifications

Darayib does not clerics and officials office swap have criticized iswap's leadership over its repeated imposition in clear violation of guidance from isis central a former iswap cleric told the new humanitarian quoting him here this darayib was supposed to be a once a year levy on the people only when there was a need iswap has turned it into a recurring

Practice collecting it annually and even multiple times within the same year end quote he also added that nine other clerics have been exiled from iswap for criticizing the constant imposition of darayib which says a lot about how important iswap considers the tax all of these taxes put together see iswap earning about 191 million annually a staggering sum

When you consider that the government of nigeria's northeastern borno state earns just 18.4 million dollars in taxes in 2024. while this swap is an extreme example given the bureaucratic efficiency and the structure of its taxation system most terror groups in west africa impose similar levies in the areas they hold away from africa we should talk about the

Taliban in afghanistan because they are perhaps the goats of using taxation to fund terror activities even before the taliban swept back into power following the withdrawal of american troops from afghanistan they were one of the wealthiest groups in the country with the un estimating that from 2011 to 2021 they made about 400 million dollars every year much

Of this money came from the taxation of opium a substance derived from the poppy plant afghanistan is the world's largest producer of opium and exports anywhere from 1.5 billion to 3 billion dollars worth each year the taliban imposed a 10 tax on farmers and also taxed the laboratories converting opium into heroin as well as the traders who smuggled the

Illicit drugs in 2018 the u.s published a report alleging that the drug trade accounted for up to 60 percent of the u.s published a report on the taliban's revenue you the taliban also taxed the mineral industry in afghanistan with the un estimating that the group received more than 10 million dollars a year from 25 to 30 illegal mining operations in

Southern helmand province but of course taxes aren't the only way to make money as we're about to see there are innumerable ways for terror groups to get their hands on those sweet greenbacks diversified income streams so it's time to talk about one of the classic ways for terror groups to raise money kidnapping this is something that left-wing latin

American groups used to be all over with columbia's eln becoming infamous in the 1990s for stunts like kidnapping everyone on an airplane or abducting 140 people in one go from a church service today though the global leader in terrorist kidnapping is jama'at nusrat al-islam while muslinim or janim a salafi jihadist group with ties al-qaeda that operates in

The sahel particularly in mali burkina faso and niger in late october last year the uaa page nim reported 50 million dollars to secure the release of a retired emirati general and two of his associates kidnapped near bimarko in september while sam nasir a journalist from france 24 reported that the deal also included around 20 million dollars worth of

Ammunition on top of the cash although some amounts described that second sum as an additional cash payment instead of a direct delivery of ammunition malian security sources claimed that roughly 20 to 30 janim prisoners walked out of a mamaco jail as part of the same arrangement 50 million dollars is a record for the region but this wasn't the first time

The group received a large sum of money as ransom insight monitor reported that the group received around 40 million dollars in ransom for one french and two italian hostages before kidnapping wealthy foreigners became the norm virginim they mainly kidnapped locals and received much less which suggests that the shift foreigners was a deliberate change in

Strategy to ensure that they could earn as much money as possible thousands of kilometers away in mozambique the islamic state mozambique province or ism is also running a kidnapping ring according to peter boffin a senior analyst for southeast africa at the conflict monitoring group akled kidnappings for ransom by the ism quadrupled in 2025 making up around

10 percent of everything the group did that year the group targets the n380 highway specifically setting up roadblocks and stopping buses and trucks carrying people who can move money fast ransoms are nowhere near janim's numbers often just a few hundred dollars a head but victims can pay through mobile money apps within minutes and for ism that speed is the

Entire point unlike janim which can afford to hold its kidnapped victims for long periods while it negotiates a ransom the ism can't it has fewer soldiers doesn't really control territory in the same way that iswab does in northeastern nigeria and has a few other sources of revenue during the early years of its operation the ism was funded by the main

Islamic state which channeled money to its affiliate in puntland somalia which would then distribute it to other affiliates the al-kara office as this operation came to be known was significantly disrupted by intensified operations against Islamic State and Somalia by pundled forces with support from the US and the UAE that started in early 2025.

And then there's organized crime, which covers basically every other illicit activity that the terror groups can get away with that we haven't mentioned.

The most significant of this is drug smuggling, and the terror groups in Latin America are the experts at this. During its heyday, the revolutionary armed forces of Colombia, FARC, built itself into one of the largest cocaine suppliers on the planet, starting out by taxing cocoa farmers in its territory, before moving into trafficking directly.

Back in Africa in 2012, Al-Qaeda and the Islamic Maghreb, or Akeem, one of the groups that late emerged to form Janim, made about $100 million from diversified sources, including arms and human trafficking and smuggling of cigarettes and narcotics.

Akeem was reportedly so good at smuggling cigarettes that the group's leader at the time, Mokhtar Belmokhtar, started going by the nickname Mr. Marlborough. Definitely not the brand ambassador that Marlborough had in mind when they coined the term the Marlborough Man.

Another important source of revenue for these groups is donations from ordinary, everyday people who believe in their cause.

Back in the day, this included the IRA, which raised millions of dollars from Americans attending fundraisers and supporting Irish Republican charities. Money it then used to help carry out its campaign of bombings across the UK.

Today, though, the best example of crowdfunding terror is likely Hamas, which reportedly received about $41 million between 2020 and 2023 in the form of cryptocurrency donations.

Another group in the same region, the Palestine Islamic Jihad, received as much as $93 million over a similar period. The US Treasury has since said it is investigating a further $165 million in crypto transactions that may have helped fund Hamas ahead of its October 2023 attack on Israel.

Not all of that money comes from committed supporters who know exactly what they are funding.

This is partly because, and this might come as a shocker, the terror groups are really good at lying to people. On private messaging platforms like Telegram, they solicit donations with pleas for humanitarian assistance. Donors abroad, most of them well-meaning individuals, often send money without ever knowing that it's going to finance a terror group.

The US Department of Justice broke up several of these operations in 2020, including a Bitcoin fundraising campaign run under the name Reminder for Syria, pitched publicly as a charity to help the victims of the Syrian civil war while quietly funneling donations to Al-Qaeda-linked fighters. But it's not just individuals who are funding terrorist groups.

There are countries that have made financing terror groups a key component of their foreign policy.

And of course, there's no better example than Iran.

Iran's Quds Force, a branch of the Islamic Revolutionary Guard Corps, or IRGC, which specializes in unconventional warfare and military intelligence operations, has spent years funneling money to Hezbollah, Qatayyib Hezbollah, the Houthis, and other organizations letting Tehran extend its reach across the region without putting its own troops on the ground.

Access to these proxies has been hugely beneficial to Tehran as it has allowed the Islamic Republic to open new fronts in the current war and make it even more painful for America. allies so how much money is iran giving its proxies and from everything we know it's a lot in 2018 the u.s treasury department estimated that hezbollah received around 700 million

Dollars a year from iran roughly 70 percent of the group's entire revenue that number has only grown in the years since especially after hezbollah suffered catastrophic losses in its war with israel in november last year the wall street journal reported that the quds force had smuggled over a billion dollars to hezbollah through dubai since january even more

Recently the irgc reportedly sent gold to the houthis alongside military advisors and missile and drone-related equipment as part of its preparations for the houthis entry into the iran war so now that we know how these groups make the money we need to ask the more important question what are they going to do with it and what are the governments doing about

It spending now the most obvious answer the question of what these groups are going to do with the money is exactly what you would expect them to do they are buying guns ammunition in very rare cases drones fighter salaries food fuel vehicles and training camps keeping a few hundred armed men in the field for years costs serious money and most of what these

Groups raise goes straight into their operational costs that is pretty self-explanatory what is less obvious and arguably more important is how these groups can also use the money they earn to win hearts and mines take a swap for example the group spends a lot of money through its welfare department to improve the lives of the people in the areas it controls

And yeah it's quite surprising to learn that a terrorist group can have a welfare department isn't it swap digs boreholes and installs generators to pump water in communities that have gone without either for years the group also provides boats and canoes for riverine communities that need them especially those who have to cross rivers to access their

Farmlands for those who are sick or hurt including people wounded in airstrikes by the nigerian military is what provides free medical services at its health facilities including providing the patients with medication for free like if the nhs was super into radical islam if the facility does not have the right drugs the patient walks out with a prescription

To fill at a pharmacy inside a swap territory the group also builds latrines and offers protection against violent crimes such as armed robbery and cattle rustling traders get interest-free loans and if an airstrike or an accident or fire wipes out their stock the debt gets written off farmers get free seeds and pesticides on the condition that they only

Sell their harvest inside a swap territory where the group itself buys up the produce to keep its population fed none of this spending is in any way altruistic is swap and other groups that implement a similar strategy do so because they have realized that it's the best way to safeguard their territory and build loyalty among their constituents and it works

Because the people in the areas controlled by these terrorists northeastern nigeria for iswap cabo delgado for islamic state mozambique northern mali for janim parts of rural columbia for eln often feel like the government has completely forgotten the government has completely forgotten about them despite paying to taxes, and sometimes even voting for the

Ruling party.

When a farmer in Borno pays ISWAP and gets a working borehole in return and pays the Nigerian state through official taxes and sees very little comeback except indiscriminate airstrikes that target both civilians and terrorists, then they're very likely to side with the terror group, aren't they?

For Abuja, the fact that ISWAP is proving more capable of governing is the worst-case scenario because it spotlights a legitimacy gap the state suffers, one that won't go away even if ISWAP ceases to exist tomorrow.

Away from Nigeria, we also have to talk about how so many other nations around the world are struggling to contain illicit flows that fund terror groups.

The Financial Action Task Force, or FATF, the body that leads global efforts to tackle money laundering, terrorist, and proliferation financing, published a review last year which found that 69 percent of the countries it assessed had major or structural weaknesses in their ability to investigate, prosecute, and convict terrorist financing cases.

Which means that in most of those countries, terrorists who are savvy enough can move their money without any real fear of prosecution.

The FATF also warned that criminal networks, including terrorist financers, were building their own stablecoin, a digital token designed to keep a steady price by tying its value to a traditional asset like the US dollar designed to resist freezing and asset seizure.

This makes enforcement a lot more difficult, because cryptocurrencies are, by their very nature, incredibly difficult to track. Now, we're not saying that governments around the world are completely incapable of dealing with the issue.

The FATF reported that 83 percent of the jurisdictions it surveyed had implemented the so-called travel rule, which requires crypto platforms to share, sender, and receiver information the way banks do.

This was up from 73 percent the year before. The EU also established a new body specifically focused on countering money laundering and terrorism financing, and the US is using the full might of its Treasury Department to investigate and sanction anyone believed to be financing terrorism. Still, almost every one of these measures is reactive.

Regulators are writing rules for the last method groups used to move money, while the groups themselves have generally already moved on to the next thing, whether that's a new mobile money workaround in Mozambique or a purpose-built stablecoin designed with regulators in mind. But chasing every individual transaction is a losing game.

A better approach would be for governments to go after the major players, whether it's the Al-Qarar office in Somalia that was funneling money to multiple Islamic State affiliates, or a country like Iran that has multiple terror groups at its beck and call.

Until that happens, the world will be stuck playing catch-up. To be continued... To be continued

To be continued