While the lifting of Western sanctions has paved the way for Syria's economic reintegration and reconstruction following the fall of the Assad regime, money laundering, terrorism financing, drug trafficking, corruption, and other structural risks continue to deter the foreign investment required for Syria's full recovery.
The US and other Western governments moved fairly quickly to lift sanctions on Syria after the fall of the Bashar al-Assad regime to a UN-designated terrorist group in December 2024. As argued in these pages last year, sanctions relief is essential for nations struggling to recover from conflict and international isolation. It will not be sufficient, however, to support reconstruction and development. Syria needs help to tackle the terrorism, criminality, and corruption that made the country a hub of illicit activity and an unattractive place to do legitimate business.
The US government responded cautiously by gradually easing sanctions, beginning with a time-limited permitting certain transactions. Temporary sanctions relief is a prudent way to maintain leverage over interim authorities. But it does little to boost investor confidence and attract the level of financing required for long-term projects. The has estimated the cost of Syria鈥檚 reconstruction at $216 billion. The longer sanctions persisted, the more difficult the recovery.
Within six months, the removed sanctions originally imposed under several executive orders while maintaining asset freezes and visa bans on former Assad regime officials and affiliates, including persons associated with Syria鈥檚 chemical weapons program, terrorism, and the production and trafficking of Captagon-an amphetamine-type synthetic stimulant. The removed sectoral sanctions while maintaining restrictive measures on Assad-linked individuals and entities and sanctions related to chemical weapons and drug trafficking.
The US also waived the , which mandated secondary sanctions on foreign individuals and entities supporting the Assad regime or conducting services related to the Syrian petroleum, construction, and engineering sectors. The importance of such services to economic recovery, however, meant that suspending the sanctions in six month increments would do little to encourage foreign investment. Ongoing counterterrorism sanctions were another deterrent. Although the US State Department removed interim Syrian President Ahmed Al Sharaa鈥檚 militant organization, Hay鈥檃t Tahir al-Sham (HTS), from the list in July 2025, HTS retained its status as a Specially Designated Global Terrorist (SDGT), which barred US persons from transacting with it. Syria also remained designated as a State Sponsor of Terrorism (SST) and thus ineligible for .
Sharaa lobbied the US and other states to that were hindering rebuilding. To demonstrate his commitment to reform, he launched a and tackled issues of international concern by that had , cooperating with the to identify Assad鈥檚 undeclared weapons, facilities, stockpiles, and materials, and conducting .
The efforts paid off. In December 2025, President Trump signed a law . Last month, Secretary of State Rubio rescinded Syria鈥檚 SST and HTS鈥檚 SDGT designations, calling them the In February, the UN Security Council .
Sanctions relief is supporting Syria鈥檚 re-integration with the international financial system, which will help attract more for reconstruction and participation in a . Syria鈥檚 central bank has formed a relationship with the , reconnected Syria鈥檚 banking sector to the 鈥 the primary global messaging infrastructure for cross-border transactions 鈥 and secured agreement with on modernizing Syria鈥檚 payment system. Both firms began in September.
Sanctions, however, are not the only obstacle to investment. Like other fragile states transitioning from dictatorship and conflict, Syria remains a risky place to do business.
This is reflected in the poor standing of Syria鈥檚 national efforts to counter money laundering. The Financial Action Task Force (FATF) 鈥 the international standard setter for anti-money laundering (AML) and countering the financing of terrorism (CFT) 鈥 has kept Syria since 2010 on its of jurisdictions with strategic deficiencies in their national legal and regulatory frameworks. The inability to evaluate Syria鈥檚 progress during the civil war accounts for the long duration, but Syria has work to do to get off the grey list, a status that adversely affects .
As a grey-listed country, Syria remains on the United Kingdom鈥檚 list and the European Commission鈥檚 . Both lists advise financial institutions to exercise caution when doing business in those locations. The State Department鈥檚 identifies Syria as a 鈥渕ajor money laundering jurisdiction,鈥 and an that the US Embassy in Damascus published this year notes Syria鈥檚 grey-listing under 鈥渃ompliance and reputational considerations.鈥 The Commercial Bank of Syria, the country鈥檚 , remains designated as under the USA PATRIOT Act. The bank鈥檚 2004 listing cut its access to US correspondent banking services, and although the Treasury Department issued an in May 2025, it has not rescinded the designation.
Syria鈥檚 grey-listing also reflects longstanding concerns about terrorist financing. Assad鈥檚 ouster to Lebanon, but the group has continued using exchange houses in Lebanon and Syria to receive Iranian funds, according to the . The Islamic State still has thousands of fighters in Syria, and Al Qaeda also maintains a presence, according to a recent of UN sanctions monitors. The monitoring team in described Syria as 鈥渁 strategic hub for key logisticians and financiers鈥 of the Islamic State and reported that Al Qaeda鈥檚 Syrian affiliate had 鈥渟trengthened its finances.鈥
Syria is also a hub for illicit activity. The has noted the interim government鈥檚 progress against drug trafficking, including the dismantling of industrial Captagon production facilities and seizure of hundreds of millions of pills. But small-scale drug production and trafficking have filled the gap, according to , particularly in , a traditional smuggling route that government forces do not control.
Corruption is another legacy of the Assad era. Syria ranks among the ten most corrupt countries in the world, according to , and the worst in the Levant region, according to the . Al-Sharaa reportedly against engaging in graft, and his government began work last year to recover the former regime鈥檚 ill-gotten gains by directing commercial banks to . The government also established a committee for combating illicit enrichment, which has reached with Assad-linked tycoons (some still under ), who self-disclosed proceeds of their prior business dealings. While the committee chair has insisted the settlements do not a found that some individuals have received immunity from prosecution. The process has lacked transparency and raised questions about the government鈥檚 approach to transitional justice.
Corruption, criminality, and AML/CFT risks add to the uncertainty that foreign investors face in a market with shortfalls in regulatory transparency, contract enforcement, and property rights. Central bank Governor Safwat Raslan, who also heads Syria鈥檚 AML/CFT Commission, is working to with the FATF standards, a goal of the central bank鈥檚 . The International Monetary Fund has pledged to support the strategy and announced a scoping mission. The World Bank in August approved a to help modernize Syria鈥檚 largely informal financial sector and strengthen the AML/CFT framework.
In preparation for Syria鈥檚 next FATF evaluation, which may occur in , the AML/CFT Commission has released a for combating money laundering and terrorist and proliferation financing, prepared with UN Development Program support. Syria is also receiving from MENAFATF, the FATF regional organization to which Syria belongs.
These are positive steps, but since four other MENAFATF members are currently , the US and other Western governments should supplement these efforts with capacity-building initiatives aimed at strengthening implementation and enforcement of AML/CFT and anti-corruption laws and regulations, building investigators鈥 expertise in financial intelligence, enhancing law enforcement capabilities against organized crime, and recovering stolen assets. The Treasury Department鈥檚 (OTA), which supports financial sector reform in developing countries, includes to enhance financial system integrity and AML/CFT compliance. OTA鈥檚 does not include the Middle East/North Africa, but states in the region have previously received . A recent proposal to use US International Development Finance Corporation financing to digitize government services in developing countries struggling to attract foreign investment would boost Syrian anti-corruption efforts.
The US has characterized sanctions relief as an in Syria鈥檚 recovery, but disincentives remain. Lifting sanctions should be part of a broader US strategy to provide the support that post-conflict societies need to build sound and transparent legal and regulatory frameworks and enforcement capabilities necessary to attract private sector engagement.
