"We have no silver bullet, no secret weapon to empty ISIL's coffers overnight. This will be a sustained fight, and we are in the early stages," said undersecretary for terrorism and financial intelligence David Cohen.
Cohen is among a team of Obama administration officials leading the fight against the Islamic State (IS) group, also known as ISIL, which has seized a large swath of territory in Iraq and Syria.
The group is now "considered the world's wealthiest and most financially sophisticated terrorist organisation," said Marwan Muasher, vice president at the Carnegie Endowment for International Peace.
"ISIL has grabbed the world's attention for its outlandish ambitions and astounding brutality, but also for another reason: its substantial wealth," Cohen told the think-tank.
The group's "primary funding tactics enable it today to generate tens of millions of dollars per month," Cohen said.
"Those tactics include the sale of stolen oil, the ransoming of kidnap victims, theft and extortion from the people it currently dominates, and, to a lesser extent, donations from supporters outside of Syria and Iraq."
Oil sales alone from captured refineries are allowing the militants to produce some 50,000 barrels a day from fields in Syria and Iraq, representing a daily income of about USD 1 million.
Cohen said IS was selling the oil "at substantially discounted prices to a variety of middlemen, including some from Turkey, who then transported the oil to be resold."
Oil has also been sold to Kurds in Iraq, and then resold to Turkey, as it has "tapped into a long-standing and deeply rooted black market connecting traders in and around the area."
"In a further indication of the Assad regime's depravity, it seems that the Syrian government has made an arrangement to purchase oil from ISIL," Cohen said, referring to Syrian President Bashar al-Assad.
It has also generated about USD 20 million through kidnappings, particularly of journalists and European hostages.
And it demands money from local businesses in cities and towns which it has captured through "a sophisticated extortion racket."
US airstrikes were having an effect on hindering the militants' ability to produce oil, and US sanctions would target those found buying illegal oil, Cohen said.
"We are focused on restricting ISIL's access to the international financial system in order to impair its ability to collect funds from abroad, and to move, store, and use the funds it acquires locally."