Politics

New Syria sanctions relief (and risks) explained

Firms relying on the recent wave of lifted sanctions and exceptive relief will face significant hurdles in verifying that transactions do not benefit excluded actors

Lina Jaradat

New Syria sanctions relief (and risks) explained

Matt Zweig and Max Meizlish

last update on 30 May 2025

The United States drastically reshaped its policy toward Syria late last week. On 23 May, the Treasury Department’s Office of Foreign Assets Control (OFAC) issued Syria General License (GL) 25, the Financial Crimes Enforcement Network (FinCEN) provided exceptive relief for the Commercial Bank of Syria, and the State Department issued a temporary waiver under the Caesar Syria Civilian Protection Act.

On 28 May, the Treasury Department further clarified the application of these measure by issuing additional guidance. Together, these measures mark the most significant shift in US policy toward Syria since the fall of the Assad regime, moving from a posture of near-total isolation to one of broad support for economic recovery and reconstruction.

To fully understand the implications of this relief—including the significant anti-money laundering and counter-terrorism financing risks they have introduced—we must examine its scope and limitations, as well as the present need for robust compliance monitoring in the weeks and months ahead to ensure its intended effect.

Absent any further immediate action, GL 25 indefinitely authorises transactions previously prohibited under the Syrian Sanctions Regulations. It effectively suspends most US economic sanctions on Syria—particularly those issued under Executive Order 13582—allowing transactions across most sectors of the Syrian economy.

This broadly includes making new investments, providing financial services, and trading in Syrian-origin petroleum or petroleum products. Additionally, while still short of full diplomatic recognition of the current Syrian government, GL 25 permits dealings with the new “Government of Syria...as in existence on or after 13 May 2025,” which “includes Syrian President Ahmed al-Sharaa and his government.”

Reuters — Khaled Brigade, a part of Hay'at Tahrir al Sham (HTS), hold a military parade in Damascus, December 27, 2024.

Expanded definition

Of particular note, GL 25’s broad authorisation appears to extend not only to transactions involving Syria’s military and intelligence apparatus—at least some of which involves participation from or is being led by foreign jihadist fighters who have been sanctioned by the United States as Specially Designated Global Terrorists or are members of designated Foreign Terrorist Organisations—but also to any “person that is, or has been, acting or purporting to act, directly or indirectly, for or on behalf of” the new “Government of Syria.”

This expansive definition appears to contrast with the more limited scope of prior general licenses, such as GL 24 (which is set to expire on 7 July 2025 absent renewal), which forbade “any transactions involving military or intelligence entities.”

Notably, GL 25 includes an annexe listing specific sanctioned individuals and entities with whom transactions are now permitted beyond the scope of dealings involving the new “Government of Syria,” including Syrian President Ahmed al-Sharaa (identified as Abu Muhammad Al-Jawlani) and Syrian Interior Minister Anas Hasan Khattab—both of whom continue to be sanctioned by the United States and the United Nations for their ties to Al-Qaeda’s branch in Syria known as Hay'at Tahrir al-Sham (HTS).

The annexe also includes sanctioned entities such as the Central Bank of Syria, the Syrian Ministry of Petroleum and Mineral Resources, and the Syrian Ministry of Tourism. Notably, GL 25 does not rescind or modify other general licenses, such as GL 23 and GL 24, which remain in effect for their specific humanitarian purposes. This presents continued risks as GL 24’s authorisation for transactions involving Syria’s HTS-led government extends to unspecified “entities involved with (HTS) across all geographic areas of Syria”, which could act contrary to US national security and foreign policy objectives.

Complementing GL 25, the State Department’s Caesar Act waiver exempts certain activities from sanctions under the Caesar Syria Civilian Protection Act, which targeted the Assad regime and its facilitators.

To prevent empowering malign actors under the guise of economic recovery, the US must establish clear benchmarks for continued sanctions relief and outline consequences for backsliding

Narrower waiver

Notably, the State Department used the narrower of the two Caesar Act waiver authorities to allow a temporary 180-day suspension of specific sanctions, not the broader authority to suspend the law entirely. The effect is a 180-day waiver period that suspends mandatory secondary sanctions, allowing foreign countries to engage in Syria's reconstruction with markedly less sanctions risk.

Meanwhile, FinCEN's exceptive relief for the Commercial Bank of Syria allows US financial institutions to establish or maintain correspondent accounts for the bank—which remains sanctioned for enabling Syrian and North Korean weapons proliferation. While aimed at facilitating international transactions like trade payments and remittances to support Syria's recovery, FinCEN's guidance does not exempt the Commercial Bank of Syria from other regulatory requirements or ease the compliance burden for correspondent banks.

In fact, FinCEN's exceptive relief increases compliance risks for firms willing to establish or maintain correspondent accounts for the Commercial Bank of Syria, as the exceptive relief does not waive or alter their due diligence obligations under Section 312 of the USA PATRIOT Act.

This means firms establishing or maintaining correspondent accounts for the Commercial Bank of Syria will, pursuant to Section 312's implementing regulations, need to "conduct enhanced scrutiny of such correspondent account to guard against money laundering and to identify and report any suspicious transactions in accordance with applicable law and regulation."

Explicit prohibitions

Notably, all three measures—GL 25, the Caesar Act waiver, and FinCEN guidance—explicitly prohibit transactions benefiting Russia, Iran, and North Korea. They also do not apply to any Assad regime members or facilitators, terrorist organisations, human rights abusers, war criminals, or drug traffickers that may be currently sanctioned by the United States to the extent they are not acting or purporting to act, directly or indirectly, for or on behalf of the "Government of Syria."

They also do not automatically unblock assets frozen under prior Syrian sanctions, unwind any export controls or other restrictions under the Syria Accountability and Lebanese Sovereignty Restoration Act, or alter in any way Syria's designation as a state sponsor of terrorism. They also do not rescind the designation of multiple organisations within Syria's governing authorities, such as HTS.

Ensuring compliance with these measures will be no small feat. Firms relying on the recent wave of lifted sanctions and exceptive relief will face significant hurdles in verifying that transactions do not benefit excluded actors, such as non-government-linked terrorist groups or adversarial states.

Limited visibility into Syria's transitional government and economy will continue to complicate enforcement, as will the risk of sanctions evasion through opaque financial networks. Coordinating with international partners, each with their own regulatory frameworks and political priorities, will add further complexity.

This trio of measures—GL 25, the Caesar Act waiver, and FinCEN's exceptive relief with respect to the Commercial Bank of Syria—ushers in a new chapter for Syria in which economic recovery and reconstruction have the potential to take centre stage. Success depends on robust monitoring, international collaboration, and the new Syrian government's commitment to stability and reform from its terrorist past. The United States must be clear in this regard about what will constitute success for the new Syrian government, as well as what future actions will result in continued sanctions relief and, potentially, a full lifting of the regulatory regime supporting them.

Bandar AL-JALOUD / Saudi Royal Palace — Saudi Crown Prince Mohammed bin Salman (R) watching as US President Donald Trump (C) shakes hands with Syria's interim president, Ahmed al-Sharaa, in Riyadh on May 14, 2025.

A rare opportunity

The new Syrian government has been handed an opportunity. The shift in US policy reflects a willingness by the Trump administration and some members of Congress to support Syria's recovery, but only if that recovery is rooted in reform, not repression. Syria's self-appointed president remains under US and UN sanctions for leading a jihadist movement.

Key ministries remain entangled with sanctioned terrorist groups. The Central Bank of Syria, which has long been a conduit for illicit finance and proliferation activity, remains far from rehabilitated. These are serious red flags that demand rigorous oversight from the United States and international watchdogs such as the Financial Action Task Force.

To prevent empowering malign actors under the guise of economic recovery, the US must establish clear benchmarks for continued sanctions relief and outline consequences for backsliding. This includes establishing robust and transparent compliance mechanisms, enhancing international coordination, and reaffirming that sanctions relief can and will be reversed if reforms falter or abuses persist.

A prosperous, peaceful Syria is a worthy objective. But if the new government fails to break with its terrorist past and uphold its obligations, the United States must be prepared to snap back sanctions in full. Simply put, Washington cannot afford to let a policy meant to support recovery become a shield for impunity.

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