After years of stifling financial isolation, Syria appeared\u2014over the past two years\u2014to be on the verge of a historic return to the global financial system.<\/p>\n\n\n\n
Most US and European sanctions were lifted, Syria was officially removed from the list of state sponsors of terrorism on August 24, 2026, connectivity to the international SWIFT network was restored on November 20, 2025, and sweeping reform initiatives were launched.<\/p>\n\n\n\n
Yet, despite these formal achievements, Syria remains on the FATF “grey list,” and international correspondent banks continue to avoid dealing with the country.<\/p>\n\n\n\n
This article examines this paradox: why do political decisions fail to translate into an actual banking recovery?
And what are the genuine prerequisites for ending this financial isolation?<\/p>\n\n\n\n
To understand the dilemma of Syria\u2019s financial reintegration, one can look to the concept of “profound mistrust” within institutional economics.
This concept explains that once financial institutions lose confidence in a specific banking system, they do not return to it simply because the legal grounds for isolation have vanished; rather, they require credible, sustainable signals of a shift in behavior and practices.<\/p>\n\n\n\n
Economist Douglass North introduced the concept of “path dependence,” which suggests that past economic and institutional decisions constrain future choices. In the case of Syria, four decades of sanctions and designations have created a weak institutional structure, severed banking relationships, and accumulated legal risks\u2014challenges that cannot be overcome by a single political decision.<\/p>\n\n\n\n
As Mukhlis al-Nazir, the former First Deputy Governor of the Central Bank of Syria, aptly summarized the situation: “The legal wall has fallen, but the banking wall remains standing.” He noted that rebuilding trust in the Syrian financial sector would be a slower process than dismantling the sanctions regime itself.<\/p>\n\n\n\n
Lifting Sanctions and Removing the Designation:
The final process of rescinding Syria\u2019s designation as a state sponsor of terrorism began on July 8, 2026, when U.S. Secretary of State Marco Rubio announced that President Donald Trump had formally notified Congress of his administration’s intention to remove Syria from the list.
Following the mandatory 45-day review period, Syria was officially removed from the list on August 24, 2026; the U.S. Department of the Treasury announced that Syria was no longer subject to the prohibitions associated with the sanctions regulations applied to governments designated as state sponsors of terrorism.
This decision was made in recognition of steps taken by the Syrian government, including formally joining the Global Coalition to Defeat ISIS in November 2025 and conducting operations aimed at dismantling terrorist networks linked to ISIS, Al-Qaeda, and Hezbollah. Rubio also emphasized that revoking the designation “removes the final major obstacles to private sector investment in Syria, supporting the recovery of the Syrian economy and its reintegration into the global economy.”<\/p>\n\n\n\n
Restoration of SWIFT and Payment Networks:
On November 20, 2025, the Central Bank of Syria re-established its connection to the SWIFT network following a 14-year hiatus, sending its first international banking message to correspondent banks worldwide.
Visa and Mastercard also returned to the Syrian market; the first international card-based payment transaction took place on August 27, 2026, after a suspension of more than 15 years.
Central Bank Governor Safwat Raslan asserts that “the current challenge is not the existence of the system itself, but rather the rebuilding of relationships with correspondent banks around the world.”<\/p>\n\n\n\n
Institutional Reforms:
On July 21, 2026, Syria launched a national strategy to combat money laundering, the financing of terrorism, and the proliferation of weapons, in cooperation with the United Nations Development Programme (UNDP). The initiative aims to enhance institutional coordination and safeguard the national economy against financial risks.
Hamid Saif Al Zaabi, President of the Middle East and North Africa Financial Action Task Force (MENAFATF), emphasized that this strategy “represents a significant step toward strengthening the national system and developing institutional and legislative frameworks in alignment with international standards.” The government also contracted the global firm Oliver Wyman to conduct an institutional review of the Central Bank of Syria, focusing on compliance and transparency\u2014two issues widely viewed as the primary obstacles keeping Syria on the FATF “grey list” and preventing the return of global banks.
The first meeting between the Oliver Wyman team and representatives of Syrian banks took place on May 7, 2026.
A delegation from the Middle East and North Africa Financial Action Task Force (MENAFATF) visited Damascus on July 23, 2026\u2014the first official visit since 2010\u2014to prepare for the mutual evaluation Syria is set to undergo in 2027. This evaluation is considered “one of the most important international mechanisms for assessing the effectiveness of anti-money laundering and counter-terrorism financing systems.”<\/p>\n\n\n\n
The FATF Grey List:
As of the latest FATF update on June 19, 2026, Syria remains listed among countries subject to increased monitoring, alongside nations such as Algeria (prior to its removal), South Sudan, Venezuela, Vietnam, and Yemen.
While this listing does not impose direct sanctions, it raises the “risk premium” demanded by international banks for dealing with any Syrian institution. Economist Yahya Al-Sayed Omar emphasizes that a “nominal return” to SWIFT does not equate to an “actual return”; a bank might be connected to the network, yet this does not guarantee that Syrian companies will immediately be able to execute transfers.<\/p>\n\n\n\n
Absence of Correspondent Banks:
Global banks do not return to a market simply because a political decision has been issued.
Their compliance departments must ensure that dealing with Syrian institutions and clients will not expose them to legal or regulatory risks or future fines. Louay Al-Homsi, Head of the Financial Advisory Sector at the American-Syrian Business Council, notes that Syria “still needs more time and preparation” to establish direct correspondent banking relationships with the United States. …united.<\/p>\n\n\n\n
Internal Institutional Challenges:
An Oliver Wyman report revealed institutional gaps within the Central Bank of Syria regarding compliance and transparency.
These gaps are widely considered the primary obstacles keeping Syria on the FATF “grey list” and preventing the return of global banks.
Experts also note that the success of reforms “hinges on the compliance culture within Syrian financial institutions, rather than merely on legal texts.”<\/p>\n\n\n\n
Reliance on a “Third Party”:
Information indicates that the coming phase will see dollar-denominated transfers to Syria routed through a third party.
This implies that financial reintegration will, for the foreseeable future, be indirect and reliant on regional intermediaries.
This limits the full scope of economic benefits and keeps Syria in the position of a “dependent” rather than a “partner.”<\/p>\n\n\n\n
Fourth: International Experiences:<\/p>\n\n\n\n
Syria\u2019s financial dilemma cannot be viewed in isolation from the experiences of countries that have successfully exited the grey list or are still striving to do so.<\/p>\n\n\n\n
Algeria\u2019s experience stands out as the most inspiring in terms of speed; it exited the grey list in less than twenty months following its inclusion in October 2024, according to an analysis by the US-based Atlantic Council.<\/p>\n\n\n\n
The analysis contrasts this with nearby regional examples: Morocco took about two years to be removed from the list in 2023, while the UAE required a similar timeframe in 2024.<\/p>\n\n\n\n
The analysis attributes the speed of Algeria\u2019s process to the fact that the reforms were “precise, technical, and entailed direct economic costs.” South Africa\u2019s experience offers another lesson; it was removed from the grey list on October 24, 2025, following a successful on-site review, having originally been listed in February 2023. Its exit required the implementation of 22 FATF measures, including expanding the scope of regulated entities, enhancing beneficial ownership transparency, tightening reporting obligations, and improving enforcement capabilities.
A report by Baker McKenzie notes that “lessons learned from Morocco\u2019s exit demonstrate that sustainable compliance requires systemic change and cultural adoption, rather than merely technical reforms.”<\/p>\n\n\n\n
Turkey\u2019s experience is also instructive; it exited the grey list in June 2024. A year and a half later, in November 2025, it hosted a FATF expert mission for post-exit monitoring\u2014a step signaling an ongoing commitment to global standards and the rebuilding of trust.
The key takeaway from these experiences is that exiting the grey list is a protracted process requiring deep institutional reforms, a cultural shift within financial institutions, and a sustained commitment to international standards, rather than just superficial changes.<\/p>\n\n\n\n
A Political Achievement Lacking Economic Translation:
Undoubtedly, the lifting of sanctions and the removal of the classification represent major diplomatic achievements. However, a wide gap remains between political rhetoric and economic reality. Macroeconomic indicators point to a relative recovery\u2014specifically, projected growth exceeding 10% in 2026 and a drop in inflation to 11.5% in 2025, down from 72.1% in 2024.
Yet, this improvement “has not yet translated into tangible betterment in the lives of most Syrians,” as poverty rates remain high and humanitarian needs are immense.<\/p>\n\n\n\n
Reforms: Are They Sufficient?
The national strategy to combat money laundering is a significant step, but it came late and lacks binding implementation mechanisms.
An Oliver Wyman report notes that the success of these reforms “hinges on the culture of compliance within Syrian financial institutions, rather than merely on legal texts.”
This requires investment in training, a shift in mindsets, and a considerable amount of time.<\/p>\n\n\n\n
Reliance on a “Third Party”
Information suggests that the coming phase “will see dollar remittances to Syria routed through a third party.”
This implies that, in the foreseeable future, financial flows will be indirect, relying on regional intermediaries (such as Turkey or the UAE). This limits the full economic benefits and keeps Syria in the position of a “dependent” rather than a “partner.”<\/p>\n\n\n\n
Sixth, future scenarios:<\/strong><\/p>\n\n\n\n Scenario One: Gradual Recovery (Most Likely): Scenario Two: Prolonged Stagnation: Scenario Three: Accelerated Re-engagement (The Optimistic Scenario): Based on this analysis, the Syrian Future Movement recommends the following:<\/strong><\/p>\n\n\n\n First: Accelerate institutional reforms; the Central Bank of Syria must adopt a clear implementation plan\u2014featuring a specific timeline and measurable performance indicators\u2014to address the gaps identified in the “Oliver Wyman” report.<\/p>\n\n\n\n Second: Foster a culture of compliance; legal provisions alone are insufficient. Investment must be made in training banking personnel, and… …modernizing internal control systems and adopting international best practices for combating money laundering, following the examples set by South Africa and Morocco.<\/p>\n\n\n\n Third: Building regional partnerships by leveraging relations with Turkey, the UAE, and Saudi Arabia to open regional banking channels. These would serve as a temporary “bridge” to the global financial system, mirroring the Turkish model that led to its removal from the grey list in 2024.<\/p>\n\n\n\n Fourth: Ensuring full transparency by publishing periodic reports on reform progress, Oliver Wyman reports, and financial indicators to build trust with the international community and investors.<\/p>\n\n\n\n Fifth: The Syrian private sector must be a partner in the reforms\u2014not merely a spectator\u2014and should be represented on advisory and oversight committees.<\/p>\n\n\n\n Sixth: The Syrian government must thoroughly study the experiences of Algeria, Morocco, and South Africa to glean lessons regarding the pace of reform, the culture of compliance, and the sustainability of exiting the grey list.<\/p>\n\n\n\n Rejoining the global financial system represents a true test of the Syrian transitional government’s seriousness regarding reform. <\/p>\n","protected":false},"excerpt":{"rendered":" Syria and the gamble on returning to the global financial system after years of financial isolation and economic challenges.<\/p>\n","protected":false},"author":35,"featured_media":67723,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4661,4853],"tags":[4718],"class_list":["post-67725","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economic-office-en","category-research-and-studies-department-en","tag-articles"],"yoast_head":"\n
In this scenario, Syria implements the required reforms and is removed from the “grey list” in 2027 or 2028, after which correspondent banking relationships begin to return gradually.
This process would take three to five years, bringing tangible improvements to trade-related transfers, though foreign investment would not fully return.
This scenario requires continued relative security stability, ongoing international support, and a steadfast political will to reform.
As North\u2019s concept of “path dependence” suggests, four decades of isolation will continue to constrain available options, making gradual recovery the most realistic path.<\/p>\n\n\n\n
If Syria fails the 2027 mutual evaluation, or if international priorities shift, the status quo may persist: a nominal capacity for transfers alongside an actual inability to attract investment.
This scenario would deepen reliance on “intermediaries” and “informal channels,” carrying associated risks of corruption and inflation.<\/p>\n\n\n\n
If Syria succeeds in rapidly completing reforms and secures strong US and European support, it could witness a swift return of correspondent banking\u2014particularly given the readiness of JPMorgan and Turkish banks to enter the Syrian market. This scenario requires strong political will, complete transparency, and security stability.
It closely resembles Algeria\u2019s experience regarding the pace of reform, yet it remains the least likely outcome given the deep-seated structural challenges.<\/p>\n\n\n\nSeventh: Recommendations<\/h2>\n\n\n\n
Finally:<\/h2>\n\n\n\n
Political decisions alone are insufficient; banking trust is built through practices, transparency, and time\u2014not through statements and speeches.
Mukhlis Al-Nazir succinctly summarized the dilemma when he stated, “The legal wall has fallen, but the banking wall remains standing.”
The true test lies not in lifting sanctions, but in enhancing efficiency, building trust, and transforming political opportunity into sustainable economic prosperity. International experiences\u2014from Algeria to South Africa\u2014demonstrate that exiting the grey list is not the end of the road, but rather the beginning of a new phase requiring sustained adherence to standards and a genuine shift in organizational culture.<\/p>\n\n\n\nReferences:<\/h2>\n\n\n\n
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