Syria -- AML/CFT Compliance Regulatory Overview

It's crucial to understand that cryptocurrencies are largely prohibited and their use criminalized in Syria. This fundamentally impacts any discussion of AML/KYC requirements for Virtual Asset Service Providers (VASPs) because, legally speaking, such providers cannot operate within the country.

Therefore, there are no specific AML/KYC requirements for legally operating cryptocurrency/virtual asset service providers in Syria, as the services themselves are illegal.

However, Syria does have general AML/CFT legislation for traditional financial institutions. We will outline what exists, with the critical caveat that it does not apply to crypto services due to their ban.

Cryptocurrency/Virtual Asset Status in Syria

1. Prohibition: The Central Bank of Syria (CBS) has repeatedly issued warnings and directives prohibiting the use and trading of cryptocurrencies.
2. Criminalization: Law No. 36 of 2022 (issued in November 2022) explicitly criminalizes various activities related to cryptocurrencies, including their use as a payment method, trading, and promotion. Penalties are severe, including imprisonment and hefty fines.

Given this legal landscape, any entity attempting to act as a VASP in Syria would be operating illegally and subject to criminal prosecution, not regulatory AML/KYC oversight.

General AML/CFT Framework in Syria (Applies to Traditional Financial Sector)

While not for VASPs, Syria has a general AML/CFT framework driven by international obligations (though its effectiveness is often questioned, and it has faced scrutiny from the Financial Action Task Force - FATF).

1. AML/CFT Legislation (General)

The primary legislation governing Anti-Money Laundering and Counter-Terrorism Financing in Syria for traditional financial institutions includes:

• Legislative Decree No. 33 of 2005 on Anti-Money Laundering: This was the foundational AML law.
• Law No. 33 of 2014 amending Legislative Decree No. 33 of 2005: This significantly updated and strengthened the AML framework, particularly to address terrorism financing. It incorporated a risk-based approach and expanded the scope of reporting entities.
• Legislative Decree No. 27 of 2013 on Counter-Terrorism Financing: This decree specifically addresses the financing of terrorism, establishing measures and penalties.

Note: These laws apply to banks, insurance companies, money changers, and designated non-financial businesses and professions (DNFBPs), but not to cryptocurrency service providers, as such services are illegal.

2. Customer Due Diligence (CDD) Requirements (General)

For regulated entities under the general AML framework (e.g., banks), CDD requirements typically include:

• Identification and Verification: Obtaining and verifying the identity of customers (individuals and legal entities) using reliable, independent source documents, data, or information. This includes names, addresses, dates of birth, national ID numbers, etc., for individuals, and registration details, beneficial ownership, and control structure for legal entities.
• Beneficial Ownership Identification: Identifying and taking reasonable measures to verify the identity of the beneficial owner(s) of customers, including for legal persons and arrangements.
• Purpose and Nature of Business: Understanding the purpose and intended nature of the business relationship.
• Ongoing Monitoring: Conducting ongoing due diligence on the business relationship and scrutiny of transactions undertaken throughout the course of that relationship to ensure that the transactions are consistent with the institution's knowledge of the customer, their business, and risk profile.
• Enhanced Due Diligence (EDD): Applying EDD for higher-risk situations, such as relationships with Politically Exposed Persons (PEPs), customers from high-risk jurisdictions, or complex transactions.

3. Suspicious Transaction Reporting (STR) Obligations (General)

Regulated financial institutions and DNFBPs are obligated to report suspicious transactions (or activities) to the Financial Intelligence Unit (FIU) if they suspect or have reasonable grounds to suspect that funds are the proceeds of a criminal activity or are related to terrorism financing.

• The reporting mechanism involves submitting a Suspicious Transaction Report (STR) without tipping off the customer.
• There are provisions for freezing funds suspected of being related to money laundering or terrorism financing.

4. Record-Keeping Obligations (General)

Regulated entities are required to maintain records for a specified period (typically 5-10 years) for:

• Customer identification data (e.g., copies of ID documents).
• Account files and business correspondence.
• Records of transactions, sufficient to reconstruct individual transactions.

These records are crucial for audit trails and for providing information to competent authorities upon request.

5. Overseeing Authority (General)

The primary authority overseeing AML/CFT compliance in Syria's traditional financial sector is:

• The Anti-Money Laundering and Counter-Terrorism Financing Commission (AMLCFTC): This commission acts as the Financial Intelligence Unit (FIU) for Syria. It is responsible for receiving, analyzing, and disseminating suspicious transaction reports.

• Central Bank of Syria (CBS): While the AMLCFTC is the FIU, the Central Bank of Syria is the main financial regulator and plays a key role in issuing regulations and supervising compliance for financial institutions under its purview.

Regulatory Body URL:

• Central Bank of Syria: http://www.cbs.gov.sy/ (Information on the AMLCFTC/FIU is typically housed or linked from the CBS website, as there isn't usually a separate public website for the FIU itself in many jurisdictions).

Conclusion for VASPs in Syria

In summary, for any entity considering operating as a cryptocurrency/virtual asset service provider in Syria:

• It is illegal.
• There are no legal AML/KYC requirements because the service itself is prohibited.
• Engaging in such activities carries significant criminal penalties under Law No. 36 of 2022.
• Furthermore, Syria is subject to international sanctions, making any financial activity, especially involving novel assets like crypto, extremely high-risk from an international compliance perspective.