Enab Baladi – Mohammad Kakhi
Syria’s private banking sector requires the restoration of international relations with global banks. However, the presence of sanctioned shareholders in these banks prevents such engagement. A single sanctioned stakeholder triggers stricter due diligence, delays in onboarding, and heightened scrutiny, which increase compliance costs and often drive risk-averse institutions to withdraw.
Bank compliance refers to adherence to all banking regulations, laws, and ethical standards. Its function is to address non-compliance risks that could result in legal penalties, financial losses, or reputational harm. Compliance typically combats or mitigates:
Money laundering and terrorist financing
Financial and banking fraud
Conflicts of interest and corruption
Violation of customer rights
According to a study by the Karam Shaar Center for Consultancy, eight individuals (either directly sanctioned or linked to sanctioned persons) held stakes in 15 private Syrian banks as of August 20. Among the most problematic for compliance purposes are Ahmed Khalil and Nasser Deeb Deeb, both of whom are sanctioned by the European Union for acting as economic fronts for the former regime.
Benjamin Feve, lead researcher and analyst at the Karam Shaar Center, explained to Enab Baladi that European banks may legally deal with Syrian banks if they are not “effectively controlled” by a sanctioned individual, as such control would render them sanctioned entities themselves. The challenge, however, lies in verifying that a bank is free from such control—an expensive and time-consuming process. Given Syria’s limited financial incentives and low returns on investment, most banks are unwilling to engage under such conditions.
According to the Financial Action Task Force (FATF) guidelines, correspondent banks must verify the “beneficial owners” of institutions with which they interact and terminate relationships when risks cannot be effectively managed. While not an outright ban, elevated risk raises compliance costs and undermines commercial viability.
Identifying and isolating problematic shareholders
The Karam Shaar study also highlighted controversial figures such as Nadia Yassin Salman, who holds shares in seven Syrian banks. Although not personally sanctioned, ownership reviews since June 2021 show Rami Makhlouf’s shares disappearing and Salman’s shares appearing in nearly identical proportions. She is also believed to have acquired the shares of Mohammed Hassan Abbas, a U.S.-sanctioned proxy of Makhlouf, in the transport-focused STC Company. These moves suggest efforts to shield Makhlouf’s assets or regime-managed transfers to a trusted figure.
Beyond specific names, shareholder registries in private banks remain dominated by sanctioned individuals, entities linked to them, or others exposed to risk due to family or business ties.
Feve argued that the private banking sector must first publicly acknowledge the problem, declare that such shareholders no longer play any role in the banks, and remove their decision-making or voting rights. He stressed the need for transparency in dealings with international financial institutions.
Legal tools
Restoring correspondent banking between Syrian private banks and international banks remains highly problematic, economists told Enab Baladi. Yet, dismantling these obstacles is possible through legal measures.
Dr. Abdul Moneim Halabi, an economist and former employee at Aleppo Central Bank, said effective remedies require legal action against problematic shareholders. If proven to have acquired wealth through financial crimes or crimes against humanity, their assets must be confiscated and transferred to the public treasury, either under direct government management or through public auctions.
Halabi added that the transitional government and the Central Bank of Syria must respect judicial independence, granting courts full authority to determine the fate of these assets in line with the rule of law and transitional justice requirements. Citizens and civil society organizations should also be empowered to initiate legal proceedings.
Feve noted that presidential or central bank decrees publicly announcing asset freezes are essential. The Central Bank must review current boards of directors and shareholder structures, dissolving any boards tainted by sanctions.
Dr. Abdul Hakim al-Masri, economist and former Minister of Finance and Economy in the “Syrian Interim Government,” agreed that freezing such assets would significantly enhance banking credibility and help bypass sanctions—whether through legislation, decrees, or judicial rulings.
Need for international initiative
Experts argue that Syrian banks must resume communication with international counterparts. However, Feve explained that European banks are uninterested in the Syrian market’s complexities, often not even responding to outreach.
He suggested that international banks should take the first step, with European governments providing guarantees that re-engaging with Syrian banks would not breach sanctions. Such assurances could pave the way for renewed investment, since one of Syria’s main obstacles is the absence of correspondent banking relationships.
For their part, Syrian banks must adhere to Basel banking regulations by publishing transparency reports, submitting clear data to the SWIFT system, and disclosing shareholder structures. According to al-Masri, they can also invite Basel and SWIFT auditors to review their operations and financial records, thereby bolstering credibility with international oversight.
Consequences of isolation
Sanctions have severely undermined Syria’s economic development, freezing assets, blocking financial and trade transactions, and stifling investment and production across multiple sectors.
Al-Masri explained that the absence of international banking ties undermines Syria’s economic output, fuels the black market, complicates money transfers, particularly large transactions, and raises remittance costs when conducted outside SWIFT channels. Investors are discouraged from channeling significant sums through unofficial routes, stifling investment, development, and foreign trade.
Feve concluded that banking isolation obstructs economic recovery, making it nearly impossible to finance projects, reconstruction, or capital inflows without correspondent banking. Without reform, Syria’s economy will remain hostage to the informal sector, which has already reached its limits in recent years.
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