In May 2025, the United States, European Union, and United Kingdom took coordinated steps to ease long-standing sanctions on Syria, effectively reopening one of the world’s most heavily embargoed economies. On the surface, this appears to mark a new chapter of economic recovery and regional reintegration for a war-ravaged country. But beneath the optimism lies a volatile and opaque landscape, one in which the risks of terrorist financing, proliferation, and money laundering remain alarmingly high. For businesses considering engagement with Syria, sanctions relief may suggest a new era of openness, but it masks a reality that remains incredibly dangerous.
Moreover, entities that may not directly be involved with Syria could see an influx of risk from other companies doing business in Syra. From banks’ clients depositing cash to law firms advising customers, a relaxation of sanctions on Syria creates a knock-on compliance problem across the world.
Why were sanctions on Syria lifted?
The rationale for lifting sanctions on Syria is largely geopolitical. Following the fall of Bashar al-Assad in December 2024 and the rise of a new transitional government under Ahmed al-Sharaa, Western powers have embraced a pragmatic, if uneasy, stance. The Assad regime’s collapse opened the door to reconstruction, and governments in Washington, Brussels, and London chose to incentivise stability over further isolation.
The logic is simple: with 90% of Syrians living below the poverty line and infrastructure decimated after 14 years of civil war, the country needs outside investment to survive. The sanctions, once a tool for pressuring Assad, are now seen as a barrier to recovery. By loosening restrictions, Western governments hope to avoid the creation of another failed state in a region already saturated with instability.
However, the Sharaa government, a group of warlords who emerged from the jihadist Hay’at Tahrir al-Sham (HTS), presents a troubling paradox: it is simultaneously viewed as a break from the past and a dangerous unknown. While some international actors hail Sharaa’s “moderation” and outreach to the West, he remains a former designated terrorist leader, as do many in his cabinet. Western leaders are banking on Sharaa having left his murderous ways behind.
What Syria sanctions have been lifted?
United States
The most dramatic move came from Washington. On 23 May 2025, the US Department of the Treasury’s OFAC issued General License 25 (GL 25), authorising transactions with a broad array of Syrian government entities, including:
- The Central Bank and Commercial Bank of Syria
- Core energy companies such as the Syrian Petroleum Company and Banias Refinery
- Major shipping and banking institutions
This followed the earlier General License 24 and a State Department waiver of secondary sanctions under the Caesar Act. These measures opened the floodgates for US and foreign companies to re-enter the Syrian market, particularly in the energy and infrastructure sectors.
However, GL 25 does not constitute blanket relief. It excludes HTS (still a designated Foreign Terrorist Organisation), and many Syrian actors remain on the Specially Designated Nationals (SDN) list. Moreover, the authorisations are time-bound and reversible.
European Union
The EU followed suit by lifting most sectoral sanctions in May 2025. These included:
- Financial services and bond restrictions
- Sanctions on 24 key Syrian entities (e.g. Central Bank, state oil firms)
- Restrictions on trade in gold, diamonds, and luxury goods
However, sanctions tied to chemical weapons, human rights violations, and jihadist militia activity remain. New designations were even imposed on commanders in Turkish-backed militias for atrocities committed on Syria’s coast in March 2025. Crucially, the EU emphasised that this relief is “gradual and reversible,” contingent on human rights benchmarks.
United Kingdom
In March and April 2025, the UK lifted sanctions on the Central Bank of Syria, Syrian Arab Airlines, and a range of commercial entities. Financial service restrictions were also eased. These changes align closely with EU measures and are similarly conditional.
The UK’s cross-government sanctions review, published in May, underscored its intent to clarify ownership controls, streamline enforcement, and develop a civil penalty framework. This signals greater future scrutiny of Syria-linked transactions. For businesses considering engaging in Syria, their sanctions tracking procedures must be foolproof.
The new Syria? A mirage of opportunity
Despite the sanctions relief, the business environment in Syria remains treacherous. Syria is still:
- Listed as a State Sponsor of Terrorism (US)
- Subject to FATF grey listing for anti-money laundering deficiencies
- Plagued by an opaque, militia-dominated governance structure
The current government, while rebranded as transitional, is a coalition of factions with deep ties to extremist networks. Many leaders, including al-Sharaa, previously had bounties on their heads. Western intelligence has not independently verified claims that HTS has renounced jihadism. Instead, Western powers appear willing to suspend disbelief for the sake of expedience.
Moreover, the militias underpinning the new Syrian state: the Syrian National Army (SNA), Turkish-backed brigades, and HTS loyalists, are poorly integrated and prone to factional violence. Reports from the ground suggest increasing clashes between these groups and remnants of Assad-aligned forces. This is not a cohesive government, it is a fragile alliance of warlords seeking international legitimacy in order to turn a profit.
Proliferation financing, terrorist risk, and money laundering
For financial institutions and multinational corporations thinking about engaging with Syria, there are serious risks to be aware of.
Terrorist Financing: With HTS members embedded in government, any transaction risks inadvertently funding designated terrorist actors.
Proliferation Risk: Syria still possesses undeclared chemical weapons sites. Dual-use goods and industrial supplies may be diverted for illicit use.
Money Laundering: The Syrian financial system is rudimentary, cash-based, and lacks any meaningful oversight. Transactional integrity is impossible to verify.
Despite the photoshoots, Syria remains one of the riskiest countries in the world to do business. While GL 25 and EU measures enable lawful engagement with certain entities, they offer no protection if counterparties are later found to be linked to sanctioned actors. The “snapback” risk is real. Moreover, under sanctions law, even inadvertent transactions with sanctioned entities can trigger enforcement.
What does this mean for business?
Any company considering business in Syria, or even considering loosening their due diligence rules on entities connected to Syria, must be sure their compliance procedures are second to none. This includes:
- Counterparty screening: Ensure no involvement of SDNs or FTO affiliates
- Jurisdictional risk analysis: Map exposure to US, UK, and EU sanctions regimes, which are not fully aligned
- Audit trails: Maintain documentation for all Syria-related transactions
- Geopolitical monitoring: Watch for shifts in enforcement policy or renewed conflict
The energy and infrastructure sectors, while prioritised under GL 25, are deeply entangled with politically exposed persons (PEPs), regime-linked actors, and shadow networks. The history of Assad-era corruption persists; only the faces have changed.
What compliance teams should do now
The lifting of sanctions on Syria represents a geopolitical gamble. It is driven not by trust in Syria’s new rulers, but by desperation to avoid another regional implosion. But that gamble transfers risk to ordinary businesses around the world
Companies must ask themselves a hard question: is a short-term commercial opportunity worth the long-term reputational and regulatory risk? Not only this, but could third party exposure import risk right into your own business?
Syria today is not a free market waiting to flourish. It is a fractured state, run by former jihadists, backed by competing foreign powers, and riddled with corruption and insecurity. The legal permissions to do business may now exist, but the practical and ethical risks are far from resolved.
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