Financial Crime World

Financial Crime Prevention: Syria’s Ongoing Struggle Against Money Laundering and Terrorist Financing

Amidst the turmoil of the Syrian civil war, Syria’s progress in combating money laundering and terrorist financing is under the microscope of the Financial Action Task Force (FATF). Since 2010, Syria has made efforts to strengthen its anti-money laundering and counter-terrorist financing (AML/CFT) regime.

FATF’s Monitoring and Evaluation

  • FATF’s ongoing monitoring of Syria’s AML/CFT efforts
  • Syria’s current FATF status: identified with strategic AML deficiencies
  • Acknowledged reforms: criminalizing terrorist financing and freezing terrorist assets
  • Planned on-site visit: at the earliest possible opportunity

Syria’s AML/CFT Compliance: A Review of Previous Evaluations

  • The last Mutual Evaluation Report of Syria’s AML/CFT efforts was conducted by the FATF in 2006
  • Syria’s compliance at the time:
    • Compliant for 5 recommendations
    • Largely Compliant for 8
    • Partially compliant or non-compliant for 5 of 6 Core Recommendations

US Department of State’s Assessment

  • Syria identified as a country of concern for money laundering and terrorist financing in 2016 INCSR
  • Formal banking services usage: only 20% before civil unrest
    • Diminished due to international sanctions
  • Key vulnerabilities: lack of government control, poor law enforcement, porous borders
  • Daily black market transactions: $15 to $70 million
  • Regional hawala networks: involved in financing terrorism and illegal activities

Human Trafficking and Smuggling

  • Syria’s role in the ongoing human trafficking and smuggling crisis leads to vast sums of funds being laundered
  • Proceeds being laundered: often end up in financial institutions in Europe and Turkey

Crippling Sanctions and Financial Institutions

  • US sanctions against Syria since 1979, specifically targeting financial institutions
  • Institutions targeted: Commercial Bank of Syria (CBS) and its Syrian-Lebanese Commercial Bank subsidiary
  • Labels: financial institutions of “primary money laundering concern” since 2004
  • International controls: crucial for curbing financial crimes, mitigating risks associated with Syria’s complex financial system.