Part 28
By Hijaz Tamim
Exploiting Social Security and Welfare Systems
ISIS has long relied on a mix of lawful and illicit methods to fund its operations. Among these, one of the most dangerous and widely used tactics is the exploitation of government social insurance and welfare programs, a practice commonly known as benefit fraud. This is far more than simple financial misconduct; it is a covert and highly effective mechanism that directly supports the group’s military, media, and propaganda activities.
Through this method, ISIS members in select Western and European countries gain illegal access to public assistance. These funds are then diverted to finance the group’s operations, causing harm not only to national welfare systems but also posing a tangible threat to international security.
Benefit fraud occurs whenever individuals or networks receive government aid while violating eligibility requirements. Common examples include:
• Claiming unemployment benefits without qualifying
• Providing false information to obtain disability or family welfare allowances
• Concealing income, household status, or actual living circumstances
• Receiving benefits in the names of individuals who have left the country or are deceased
ISIS has systematically exploited these loopholes as a reliable source of funding.
ISIS’s Involvement in Benefit Fraud
Between 2014 and 2020, when ISIS established its so-called caliphate in Iraq and Syria, European authorities carried out extensive investigations into the group’s funding. Intelligence and judicial reports indicate that ISIS developed a remarkably stable and relatively low-risk revenue stream by abusing social welfare systems across multiple countries.
These were not isolated incidents but part of a carefully organized network designed to exploit weaknesses and bureaucratic gaps in European assistance programs. Broadly, ISIS’s benefit fraud operations can be divided into three main mechanisms:
1. Organized networks of fraudulent claims
2. Continued collection of benefits after departing the country
3. Use of fabricated identities
Details of these efforts are outlined below.
A. The Fraudulent Claims Network
A central element of ISIS’s financing strategy is its network of fraudulent benefit claims. Participants are either directly affiliated with ISIS or sympathetic to its ideology. Their goal is to extract funds from European welfare systems by exploiting legal and administrative loopholes.
1. How the network operates
ISIS operatives or associates submit unemployment, family assistance, and other welfare applications on behalf of individuals who have already left Europe for conflict zones. These applications are carefully crafted to make authorities believe the claimants still reside legally in the country. Key elements include:
• Completing forms and documentation on behalf of absent applicants
• Intentionally providing false information, such as hiding income, falsifying employment, or misrepresenting household composition
• Creating the impression that claimants continue to live in Europe and are legitimately entitled to assistance
The network also manages bank accounts, personal data, and communication for members physically located in conflict zones but continuing to collect state benefits illegally.
2. Methods of Fund Transfer
Money obtained through fraudulent claims is moved to ISIS through multiple channels:
1. Informal Financial Networks (Hawala)
The traditional Hawala system, unregulated and difficult to trace, remains widely used:
• Funds are collected inside Europe
• Equivalent amounts are delivered to ISIS members in Iraq, Syria, and elsewhere
• Transfers are not recorded in formal banking systems, reducing the risk of detection
2. Cryptocurrency Transfers
Increasingly, ISIS-affiliated networks are turning to digital currencies:
• Using privacy-oriented coins like Bitcoin and Monero
• Protecting sender and receiver identities
• Evading financial tracking systems
• Conducting small, repeated transfers that blend into normal transaction activity
3. Remote Access Via SIM Cards and Passwords
Some European bank accounts remain active even after the owner departs:
• Claimants retain remote access through SIM cards and authentication codes
• Trusted intermediaries withdraw cash from ATMs or transfer funds online
• Funds may be transferred electronically to additional accounts
• This is especially common among individuals who secretly leave Europe while keeping banking profiles active
4. Physical Cash Transfers via Intermediaries
Despite technological methods, cash transfer remains effective:
• Loyal supporters collect government payments
• Funds are discreetly stored
• Cash is transported abroad via smugglers, couriers, or organized logistics networks
• In many cases, local cells collaboratively manage the entire process of collection, storage, and delivery
Distinctive Features of ISIS’s Network
• Highly structured, persistent, and designed to evade detection
• Conceals the true location and activities of recipients
• Exploits legal loopholes and structural weaknesses within European welfare systems
• Generates recurring monthly revenue, making it one of ISIS’s most reliable and low-risk funding streams