The United Nations Security Council included the Islamic State in its resolution on fighting terror organisations such as the Al Qaeda, and approved sanctions meant to choke Isis finances by cutting it from the international financial system.
The UN Security Council on Thursday voted on the 28-page resolution drafted jointly by Russia and the United States, and will hold countries accountable to report on actions taken to counter terror financing.
"This resolution is a critical step, but the real test will be determined by the actions we each take after adoption. We need meaningful implementation, coordination and enforcement from each country represented here and many others," US Secretary of the Treasury Jacob Lew told the council, according to The Wall Street Journal.
The resolution seeks to criminalise all terror-related financial transactions and to ensure that Isis does not have access to international banks.
The UN resolution also pushes countries to clamp down on citizens who aid terror recruitment, training, or travel, "even in the absence of a link to a specific terrorist act".
However, the council members admitted that Isis was a "a challenging financial target", since most of its money is generated within its own territory from oil sales, taxes, human trafficking, extortion, smuggling of antiquities and looting.
Sale of oil, with Isis controlling a majority of Syrian oil fields, has reportedly brought in $500 million for the Islamic State.
Daesh, the Arabic name for the terror group, is also known to use hawala systems for transactions as well as anonymous prepaid credit cards, as it did in the Paris attacks, French Finance Minister Michel Sapin told the council.
Member countries will have to report back to the UN Security Council within 120 days on the actions taken as part of the resolution.