Full Analysis Summary
Syria central bank review
Syria’s central bank has begun a diagnostic review of its systems and compliance framework led by US consulting firm Oliver Wyman.
Oliver Wyman confirmed it began a gap assessment of the central bank in February, a development first reported by The National in an interview this week with central bank governor Abdulkader Husrieh.
Husrieh told The National, "We will be working on addressing any compliance, governance and transparency benchmarks identified in their report."
Informed sources said the review would take several months, and Syrian private banks have been informed and told they will be involved at a later stage.
Syria central bank review
Bankers and economic experts told The National the move is critical to rebuilding international trust and kick-starting economic recovery and was reportedly initiated under US pressure.
Oliver Wyman has conducted extensive financial sector reviews and regulatory assessments across the Middle East, including in the Gulf, Lebanon and Iraq.
The article says foreign banks have been slow to re-establish ties with Syrian counterparts despite the lifting of far-reaching Western sanctions because of risk perceptions and overcompliance, leaving many Syrian banks struggling to transfer and receive money abroad.
As regulator, a review of the central bank's compliance, governance, anti-money-laundering and counter-terrorism financing controls is seen as pivotal to reviving ties with correspondent banks and institutions such as the US Federal Reserve and the European Central Bank.
"It is always helpful to receive an assessment from a neutral third party that can attest the Syrian banking sector is ready to re-engage with the international banking community," Thaer Laham, deputy chairman of Fransabank Syria, told The National.
Benjamin Feve, a senior research analyst at Karam Shaar advisory, based in Istanbul, said the gap assessment would be "useful" and "can help improve external perceptions of the central bank's compliance efforts."
Syria reconstruction review
The article frames the assessment as a precondition for reconstruction funding and wider re-engagement.
Informed sources warned, 'Without that, no funding for the reconstruction will materialise.'
It says Washington has been co-ordinating closely with Damascus since the fall of the Bashar Al Assad regime, including several high-profile diplomatic visits and meetings between President Donald Trump and his counterpart Ahmad Al Shara.
The article says Washington has pushed Damascus to adhere to international rules as major US companies sign deals in the country.
The article stresses reputational obstacles, with sources saying, 'Under Assad, Syria’s financial sector gathered a lot of dirt' and that US banks will want to be '100% sure the market is clean.'
The review also faces practical security challenges.
Clashes in January between the Syrian army and the Kurdish armed group that controlled Syria’s north-east led to the cancellation of a business trip that included German bankers.
An integration deal was signed in January between the Kurdish-led administration and the central government.
Other security concerns, including a looming threat of an ISIS resurgence, have resurfaced.