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"Multiple kidnappings for ransom" funding ISIS, source says

Much of the funding for the Islamic State of Iraq and Syria (ISIS) is coming from extortion and "multiple kidnappings for ransom," a counterterrorism source told CBS News.

The kidnappings are primarily from citizens of European countries, including employees of corporations who quietly pay the ransom demands to get their people back, the source told CBS News senior investigative producer Pat Milton. Recently a Scandinavian corporation paid $70,000 for the return of a kidnapped employee, Milton reports.

Where is ISIS getting its money?

ISIS militants had demanded a ransom for James Foley, an American journalist who was abducted while reporting for GlobalPost in 2012. The extremist group released a video of his execution Tuesday.

GlobalPost CEO Philip Balboni told reporters Wednesday the company had spent "millions" on efforts to bring Foley home, including hiring an international security firm.

When asked about a ransom purportedly demanded by the kidnappers, Balboni said the price tag involved both financial and political demands, and that it was "substantial" and always remained the same.

A U.S. official told the Associated Press that the ISIS militants who beheaded Foley had demanded 100 million Euros (about $132.5 million) in ransom for his release. A second U.S. official told The AP that the demands were sent in emails to Foley's family in New Hampshire. Both officials spoke on condition of anonymity because they were not authorized to discuss the ransom demands by name.

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ISIS has taken a page out of the al Qaeda game book to use ransom as a source of revenue, the source told Milton. However, ISIS differs from al Qaeda in that the group has in some ways developed a "hybrid form of funding" that is both global and local, according to CBS News Senior National Security Analyst Juan Zarate.

Reports say the group is bringing in more than $1 million a day. To stem that revenue, U.S. officials will have to take certain steps now to cut off those donors but also help opposing forces in Iraq and Syria wrest back control of the local economy -- a process that could take years.

"They've combined the ability to raise funds and run an economy locally with the ability to tap into on the enthusiasm for their cause globally," Zarate said. "That really presents challenges for counterterrorism officials and in some ways is a more complicated terrorist funding model than we've seen in the past."

Milton reports that ISIS is also getting money through other criminal activity such as robberies as well as donations from supporters, some of whom make contributions through the guise of a charitable organization.

CBS News correspondent Holly Williams reports that in the land they control, ISIS is busy making the money they need to fund what they call an Islamic state. A video from Syria shows an ISIS fighter policing a local market. ISIS also levies taxes and even sells gasoline and electricity.

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