The Islamic State's Khorasan Province (ISIS-K) has historically relied on three primary sources of funding: payments from ISIS-Core, local taxation, and international donations. In a 2015 interview, an officer of Iran's Islamic Revolutionary Guards Corps (IRGC) commented that ISIS-K's real source of power in the region was in the organization's financial wealth. From its origins in 2013 to the present day, ISIS-K's monetary wealth has made it an attractive alternative for fighters unsatisfied with lower paying militant groups including TTP and the Afghan Taliban. Mirroring ISIS-Core and sister ISIS branches, ISIS-K's finances are managed by the province's Finance Commission.
At the core of ISIS-K's financial framework was the support received from ISIS-Central or the broader ISIS network. This internal coordination ensured a steady flow of funds to ISIS-K, strengthening its operational capacity. While the exact mechanisms of this financial relationship remain covert, the financial backing from the central leadership underscored the interconnected nature of various ISIS factions.
In the territories under its control, ISIS-K implemented a taxation system, imposing levies on local populations and businesses. This strategy allowed the group to extract resources directly from the communities it governed, showcasing a degree of financial autonomy within specific operational zones. The revenue generated through local taxation contributed to the group's self-sufficiency.
External and international funding constituted another crucial component of ISIS-K's financial ecosystem. The group attracted donations from sympathetic patrons, including wealthy individuals from Gulf countries like Qatar and Saudi Arabia. This external funding, coupled with collaborations with individuals willing to contribute resources, provided an additional layer of financial support. Moreover, engaging in criminal enterprises, such as human trafficking and smuggling, further diversified ISIS-K's funding sources, demonstrating adaptability in sustaining its operations.
Payments from ISIS-Core Since its inception, ISIS-K has received financial support from ISIS-Core in the Levant. Early in the group's history, ISIS-K benefitted from neither local taxation nor international donors. Up until 2015, the group's commanders received strict instruction not to impose taxes for fears of stepping on the toes of other militant groups in the region who also taxed the local populous for funds. Similarly, the newly established group had yet to establish trusted relationships with international donors that then remained with ISIS-Core in the Levant. Consequently, the new organization relied almost entirely on payments from ISIS-Core. According to the U.S. Department of the Treasury, “ISIS is best characterized as a global network of loosely organized branches and cells with varying financial activities coordinated under a central financial system that funds the core network and redistributes funds to less wealthy affiliates or global regions that it sees as a priority.”
In 2015, the year Wilayat Khorasan (ISIS-K) was officially announced, ISIS-Core in the Levant began encouraging ISIS-K to begin raising its own funds. According to a 2016 interview with three leaders from within ISIS-K's Finance Commission, ISIS-K received $100 million (USD) in 2015 and $78 million in 2016, a 22% loss, likely offset by a nearly 82% gain in private international donations. An additional factor in the decrease in funding may have been the sharp 55% decrease in ISIS-Core's income between the height of the caliphate in 2014 ($1.89 billion) and 2016 ($870 million) when the group had experienced significant territorial losses, including half of Mosul, to U.S.-led forces in Operation Inherent Resolve (OIR). Brief statements by the United States Department of State and Department of Treasury between 2019 and 2021 indicate that “ISIS core was possibly providing some funds to ISIS-K,” however the extent or sum of financial support during this time period has not been published.
Post 2021
Details of ISIS-Core's funding support to ISIS-K following the August 2021 withdrawal of NATO forces remain publicly unclear, however the U.S. Defense Intelligence Agency (DIA) and Department of the Treasury have provided characterizations, estimates, and updates regarding the financial support. According to the Department of the Treasury, the most revealing source on ISIS-Core financial support, ISIS-Core continues to directly fund ISIS-K, a province it views as a viable region to increase operational, fundraising, recruitment, and attack capabilities.
The report states that ISIS-Core money transfers, “hundreds of thousands of dollars,” largely originating in Somalia, are conducted over a variety of funds transfer mechanisms, including virtual asset service providers and hawalas, transiting through financial facilitators in Turkey and Yemen, noting that Turkey remains a key hub for ISIS to transfer funds, weapons, and operatives between the Middle East, South Asia, and Europe. The report specifically identifies three significant cases of the ISIS-Core's financing of ISIS-K, the first of which was a 2021 transfer of funds from a Somalia-based ISIS network to ISIS-K with the probable intent of supporting external operations plotting in Europe.
The second case concerned the provision of funds by ISIS-Core leaders to ISIS-K, specifically earmarked for use in external operations plots in Europe — funds that were moved through financial facilitators and supported successful attacks, including at least one attack in Russia. The third case identified transfers from Bilal al-Sudani, a key ISIS leader overseeing the organization's presence in Africa, to ISIS-K in late 2022. Bilal al-Sudani was killed by the United States military in January 2023 in a raid on his cave complex in northern Somalia. Citing an anonymous senior U.S. official, the New York Times reported shortly after his death that "Al-Sudani helped to put money in the pockets of the same elements of ISIS-K responsible for [the suicide bombing at] Abbey Gate."
Reports from DIA describe some probable reliance by ISIS-K on funding from ISIS-Core since April 2022, though no amount or estimate is provided. In Q4 (October–December) 2022, the report stated “This quarter, the international leadership of ISIS (ISIS-Core) almost certainly provided direct financial support to ISIS-K and exercises a degree of control over its Afghan affiliate through leadership appointment and financial support, the DIA said.” Later, in Q3 (July–September) of 2023, the report for the first time suggested that there had been no indications of ISIS-Core financial support to ISIS-K in the quarter, writing “The DIA said that it did not observe ISIS-K receive direct support from ISIS-Core or other ISIS branches, foreign actors, or other violent extremist groups this quarter.”
Ismatullah Khalozai Among a number of individuals sanctioned by the United States for support to ISIS-K, Ismatullah Khalozai was sanctioned on 22 November 2021 for directly providing financial support to ISIS-K on behalf of the senior leadership of the ISIS-Core. According to the Office of Foreign Assets Control (OFAC), Khalozai operated a Turkey-based hawala business which he used for two years to transfer funds to finance ISIS-K operations and carry out tasks directly for senior ISIS-Core leaders. Khalozai is also accused of conducting human smuggling operations for ISIS-K and operating a UAE-based financing scheme which involved sending luxury items to international destinations for resale to generate funds for ISIS-K prior to his role in Turkey.
Taxation
In 2015, the year ISIS-Core announced the establishment of ISIS-K, the former gave instructions to begin local "taxation" like a legitimate government, lifting previous guidance forbidding ISIS-K from raising finances, i.e., "collecting taxes" in order to avoid clashes with other militant groups collecting taxes in the region, including the Afghan and Pakistani Taliban. Interviewed in December 2015, an ISIS-K member in Herat explained, "Daesh told us that we must find some local source of money, which can help us. We are extracting from mines and collecting taxes from the people. They have told us that we need to make a lot of money for the future. We need to have a budget to buy weapons and ammunition for ourselves. Before we did not have permission to collect money." ISIS-K began to internally generate revenue by taxing local businesses and citizens, seizing and taxing mines, operating illegal checkpoints to extort truck drivers, kidnapping for ransom, and (for a time) taxing the abundant narcotics traffickers. In a 2016 report to Congress, the Pentagon stated "command and control and funding from core ISIL is limited. Rather than relying on external funding, IS-K is attempting to develop its funding streams within Afghanistan, which has put it into conflict with the Taliban and other groups vying to raise revenue from illegal checkpoints and the trade of illicit goods."
ISIS-K invoked Islamic religious authorities to collect its taxes, specifically Zakat and Ushr. Zakat () is a form of almsgiving (approximately 2.5% of one's wealth) often collected by the Muslim Ummah and is a religious duty for all Muslims as one of the Five Pillars of Islam.Bonner, Michael (2003), Poverty and Charity in Middle Eastern Contexts, State University of New York Press, , p. 15: "In the old Arabic narratives about the early Muslim community and its conquests and quarrels, zakat and sadaqa loom large at several moments of crisis. These include the beginning of Muhammad's prophetic career in Mecca, when what appear to be the earliest pieces of scripture insist on almsgiving more than any other human activity. These moments of crisis also include the wars of the ridda or apostasy in C.E. 632–634, just after Muhammad's death. At that time most of the Arabs throughout the peninsula refused to continue paying zakat (now a kind of tax) to the central authority in Medina; Abu Bakr, upon assuming the leadership, swore he would force them all to pay this zakat, "even if they refuse me only a [camel's] hobble of it," and sent armies that subdued these rebels or "apostates" in large-scale battles that were soon followed by the great Islamic conquests beyond the Arabian peninsula itself." Notably, According to classical Islamic jurists, if the collector is unjust in the collection of zakat but just in its distribution, the concealment of property from him is allowed. If, on the other hand, the collector is just in the collection but unjust in the distribution, the concealment of property from him is an obligation (wajib). The Islamic State in Iraq and Syria, as well as its geographically dispersed provinces, all use Zakat to collect taxes from subjects. ISIS-K also reportedly collected Ushr, a 10% tax on the harvests of land dependent on irrigation or rainwater or 5% tax on those dependent on well water. Zakat and Ushr have played significant roles in Islamic history and, in support of ISIS-K's narrative, were both mandated during historic Islamic caliphates.
Numerous ISIS-K sources adamantly argued that the group deliberately avoided taxing the poor farmers that constitute much of the Afghan agricultural economy, focusing its tax collection on the shopkeepers of the bazaars and the wealthy, whom it comprehensively taxed. A village elder in Helmand explained the taxes were collected "not from the village and elders, but they did collect tax from the businessmen, shopkeepers, and drug traffickers. In this way, Daesh were completely different from the Taliban. The Taliban collected Zakat from the villagers but Daesh took Zakat or tax from shopkeepers, drug traffickers, and businessmen."