The funeral took place at Mount Herzl, Israel's national cemetery in Jerusalem.
So it's like the Islamic State not being Islamic and not being a state that Israel's national cemetery in Jerusalem is not in Israel and maybe it isn't even a cemetery.
In spite of the fact that Israel considers Jerusalem as its capital, the US has refused to follow suit. Since 1967, U.S. policy says that the status of Jerusalem must be resolved between Israel and Palestine. Thus, the U.S. doesn't recognize any nation's sovereignty over Jerusalem, in spite of the thousands of years of Biblical history in which it had been the land of the Jews.
The White House press transcript of the remarks listed the funeral's location as "Jerusalem, Israel. However, on Friday, the White House corrected itself by listing Jerusalem, Israel as simply "Jerusalem."