Islamic State, Defeated U.S. Foe, Still Brims With Cash, Ambition

Islamic State remains flush with cash despite setbacks in the past year, holding financial reserves and a range of revenue streams that U.S. and Western security officials warn could pay for a dangerous resurgence.

The extremist organization and its affiliates have assets ranging into the hundreds of millions of dollars across the Middle East and Central Asia, according to the officials and government records reviewed by The Wall Street Journal.

Islamic State’s grip across a large swath of Syria and Iraq was broken last year when a military coalition dismantled its caliphate, cutting off much of its income from oil sales, tax-collection and extortion, and the local banks it had seized.

But the group still extorts local populations in areas it controls or has supporters; receives income from businesses it seized during its rule; and collects payments from human trafficking, U.S. and Western officials say. Its affiliates command a growing share of illicit tobacco markets in Pakistan and Afghanistan, and donors in several Middle Eastern countries work on raising funds, the officials say.

“The underlying conditions that allowed for the rise of ISIS remain,” Marine Gen. Frank  McKenzie, in charge of U.S. Central Command, said last month. “They continue to aspire to regain control of physical terrain. Without sustained pressure, they have the potential to do so in a relatively short period of time.”