Summary
Since the fall of the Assad regime, Syria has embarked on sweeping reforms to rebuild and modernize its financial system. The new government is prioritizing economic reconstruction, restoring international banking ties, and fostering foreign investment after years of sanctions and isolation. Key steps include reintegration into global financial networks like SWIFT, renewal of correspondent banking relations, and reforms to comply with international anti–money laundering and counter-terrorism financing standards.
The government is also liberalizing foreign exchange rules, issuing new executive instructions for investment banking, and redesigning the national currency to restore confidence. Despite these ambitious initiatives, challenges such as corruption, political instability, and incomplete sanctions relief still threaten progress.
The fall of the Assad regime in December 2024 has ushered in a period of intense and fundamental change for Syria’s financial regulatory framework. After over a decade of conflict, isolation, and crippling international sanctions, the new Syrian government is aggressively pursuing a roadmap focused on reconstruction, economic recovery, and reintegration with the global financial system. This new framework is characterized by a strategic shift from the restrictive, centrally controlled, and highly punitive laws of the past towards one that seeks to attract foreign investment, modernize the banking sector, and restore public trust.
The pivot to international re-engagement is the most significant driver of the new regulatory environment, as it eases the sanctions imposed by major Western powers. Following the political transition, the United States, the European Union, and the United Kingdom have all taken steps, such as issuing general licenses (e.g., U.S. OFAC General License 24) and removing sanctioned entities (including the Central Bank of Syria) from their lists. This has triggered a cascade of regulatory reforms aimed at meeting international standards and capitalizing on the renewed access to global finance.
A critical milestone in the new framework is the re-establishment of connectivity to the international banking system, which reconnects the Banking Sector (SWIFT and correspondents).
SWIFT Reintegration as an example, in which Syrian banks, previously cut off, have begun the process of reconnecting with the global SWIFT network. The Central Bank of Syria (CBS) confirmed the successful completion of international transfers, which are vital for facilitating foreign trade, reducing transaction costs, and attracting hard currency.
Furthermore, Correspondent Banking is serving as a priority for the re-establishment of the CBS. The CBS is prioritizing the re-establishment of correspondent banking relationships with foreign institutions, a necessary step for processing cross-border transactions and ensuring liquidity. This effort necessitates compliance with rigorous global AML and CTF standards, which are now a central focus of the CBS’s reform agenda.
The new framework introduces specific laws and instructions designed to modernize the financial sector and facilitate reconstruction funding.
For instance, the Focus on Investment Banking Law No. 56 of 2010 (Executive Instructions). While the Investment Banking Law has existed for years, the CBS has recently prioritized issuing its Executive Instructions. This move is a “qualitative step” aimed at defining Investment Banks, increasing capital requirements, allowing specialized legal entities, regardless of nationality, to own up to 49% of an investment bank’s capital, with balanced oversight and investment.
Yet, the most significant and immediate shift is the move away from the draconian foreign exchange (forex) controls that characterized the previous regime. For instance, the new government has signalled a clear departure from highly punitive measures, such as the infamous Legislative Decrees No. 5 and No. 6 of 2024, which enforced severe penalties (including lengthy prison sentences and massive fines) for unauthorized foreign currency exchange or use.
Thus, the decriminalization aims to move away from blanket criminalization of the use and holding of foreign currency by private citizens. However, the exact extent of the liberalization remains a work in progress. By this, the goal is to gradually allow market forces a greater role in determining the exchange rate, moving away from the complex, distortionary system of multiple exchange rates (official, subsidized, and black-market) that previously led to corruption and economic inefficiency.
With sanctions relief and a push for reconstruction, the new rules are designed to welcome and manage the inflow of foreign currency from the diaspora, international aid, and FDI, rather than solely focusing on preventing capital flight.
The CBS is planning a redesign of the national currency, including removing two zeros from the Syrian pound’s nominal value. While acknowledged as a measure to simplify transactions in an inflation-burdened economy, the real goal is to bolster public confidence and signal a commitment to monetary stability and reform, laying the groundwork for more stable monetary policy in the future.
While the new regulatory framework is highly ambitious and reflects a strategic pivot toward integration and free-market principles, significant challenges remain, including security and political instability, infrastructure issues, corruption, and residual sanctions.
In sum, Syria’s new financial regulatory framework represents a crucial “amber light,” a moment of transition and opportunity. The CBS is pushing an aggressive reform agenda centred on transparency, institutional accountability, and international alignment, hoping to transform the banking sector from an engine of state control into a dynamic facilitator of national reconstruction.
