Summary and Recommendations

Executive summary and main findings of the research

NGOs working on Syria and/ or operating within the country have been confronted with rising obstacles since 2014 in their dealings with banks and financial institutions at different levels. This has been ongoing until the current time. Any mention of Syria is a red flag for banks and final institutions.

The report follows the different phases of process involved in payment mechanisms and financial operations faced by NGOs and INGOs, from opening the bank account, passing through transfer operations, to the consequences of these problems. The research provides a global analysis of the financial operations and challenges faced by NGOs (Syrian and non-Syrian), INGOs and state and EU agencies starting from European countries to those neighboring Syria (Turkey, Lebanon and Kurdistan Iraq) as well as Syria itself.

Alongside these challenges in the financial circuit, the report analyses key problems encountered by humanitarian organizations posed by the various sanctions regimes in place and particularly those imposed by the US and their extraterritorial nature.

The research notes that NGOs and INGOs working on and / or operating in Syria have faced ever-increasing difficulties and some have had to cancel projects because they could not keep up with the paperwork required by donors. Unfortunately, despite various global initiatives and conference that have taken place in recent years between various actors (NGOs and INGOs, states officials, and banking employees) to improve and facilitate the financial operations and transfers of NGOs working on or in Syria, there has been no significant progress made to date; frequently quite the opposite.

While larger NGOs and INGOs can sustain some of the difficulties encountered in the obstacles and challenges posed by delays and blocking of financial operations (often because of the larger flows of money involved and larger compliance teams), more modest and smaller entities have suffered more. This said, this situation has not lessened the transfer of risks to the Syrian NGOs operating in the field in Syria or in neighbouring countries; quite on the opposite. As such, smaller humanitarian organizations are disproportionally affected by bank de-risking processes.

In conclusion, better provision of guidance and support by sanctions-enforcing bodies is welcome, but clearly not enough to bypass the structural problems faced by humanitarian NGOs and INGOs operating in Syria or in neighbouring countries, or more generally in conflict zones. The challenges faced by Humanitarian NGOs and INGOs are not simply obstacles to try to overcome on a case by case basis, but are structural in nature and rooted in the financial system and the current international sanctions framework.

Added value to the literature

This paper constitutes an added value to the existing literature on the field regarding financial limitations and banking challenges faced by NGOs (Syrian and non-Syrian alike) and sanctions, anti-terror financial and banking laws and restrictions, and hosting countries’ regulations.

Firstly, contrary to most previous reports, this research is rooted in recent political evolutions in Syria. Physical areas outside of the domination of the Government of Syria have been reduced considerably in size in these past few years, especially after the successive military conquests of Eastern Ghouta and Daraa Province by pro-governmental forces in April and July 2018 respectively. In addition to this, cross border humanitarian assistance become limited since January 2020 with only two remaining. Moreover, working conditions have become increasingly difficult in Idlib since the group Hayat Tahrir el-Sham took control of large segments of the region after eliminating all other opposition armed forces in the area in January 2019, while the north-east dominated by the Syrian Democratic Forces remains under the constant threat of a Turkish invasion. This situation created a new dynamic among humanitarian INGOs and NGOs, leading to a mounting number of them attempting to register in Damascus and work within the boundaries of Syria’s governmental controlled areas. The Syrian government compels the vast majority of humanitarian aid to be delivered through the Syrian Arab Red Crescent (SARC) and to a lesser extent through networks of organizations that are deemed close to the authorities or not challenging it. Damascus has generally refused to authorize aid organizations and agencies planning to cross from Damascus into non-government-controlled territory, since the beginning of the uprising in 2011. At the same time, the UN agencies predominantly operate under stringent Syrian government control from its main centre in Damascus.

Similarly, political and economic changes occurred in the neighbouring countries of Syria, where a number of Syrian NGOs and INGOs are based and from which they often coordinate their operations within the country. The deepening authoritarian and repressive atmosphere in Turkey against Syrian NGOs; the official closure of the Yaroubiyah crossing for cross-border aid in Kurdistan Iraq in January 2020, and the latest financial crisis in Lebanon since October 2019 have continuous long lasting consequences for humanitarian NGOs and INGOs’ activities and financial operations.

Secondly, the research is based on numerous and diverse interviews (NGOs, INGOs, bank employees and state and EU officials and agencies), alongside a review of previous reports. This allowed for a comprehensive and global analysis of the financial operations and challenges faced by NGOs (Syrian and non-Syrian), INGOs and state and EU agencies ranging from European countries to those in the Syrian neighborhood (Turkey, Lebanon, Kurdistan Iraq) and finally Syria. This differs from previous reports, which target particular aspects of the financial circuit or a particular country.

Finally, the reports shines light on the process of risk transfer from state agencies and large INGOs to smaller and more modest humanitarian NGOs operating in Syria or neighboring countries. This has been a growing concern of a large number of humanitarian NGOs, which do not often have the resources to meet the various compliance and due diligence requirements.

Recommendations

TO STATES AND THE EUROPEAN UNION

  • To Continue involving civil society initiatives from Syria and the Syrian diaspora and local European NGOs working in the region in the discussions on compliance, de-risking and financial regulations alongside with INGOs and banks, as they deal with much of the burden of these regulations.
  • To have clearer information (in terms of access and /or understanding) on what types of humanitarian assistance is permitted and facilitate exemption processes towards sanctions and provision of licences for Humanitarian and Relief INGOs and ONGs operating on and within Syria[1].
  • To provide free or inexpensive legal advice and risk management guidance from governments, regional organisations and the UN.
  • To help the hawala system to reach more transparency and regulations when they are the unique possible instrument to transfer funds into areas facing critical humanitarian and relief needs.
  • To establish a bank / Financial institution with only duty to manage transactions for Humanitarian NGOs and INGOs operating or covering conflict zones, without fearing the consequences of financial dynamics and regime of sanctions. This bank could be created and funded by various international actors and donors.[3]
  • To coordinate with European and US fiscal authorities for the dissemination of funds and regulation of tracking and due-diligence;
  • To take measures in the framework of the various sanctions’ regimes to truly alleviate the risk of sanctions harming the Syrian popular classes and the productive sectors of the economy (agriculture and manufacturing), also to lessen the burden on NGOs and banks;

TO BANKS

  • To protect urgently the remaining correspondent banking channels working with Syria to ensure that humanitarian assistance can continue.[2]
  • To reach an agreement with the banks in coordination with INGOs and NGOs in order to provide them a unified and standard due diligence and compliance system on the types of information that are required to facilitate transfer of funds and other financial operations and procedures. A clear guidance on payment mechanisms, including correspondent banking channels, extent of due diligence required, how to deal with the common problems (such as having Syria in the name etc.);
  • To invest in more R&D into fintech solutions and AI regarding improved software and tech-based innovations to improve and simplify compliance processes;
  • To further research into how to allow for greater transparency in informal payment mechanisms, such as hawala systems and remittance networks;

TO NEIGHBOURING STATES

  • To ease registration of new NGOs and branches to diaspora and European NGOs;
  • To introduce regulations helping NGOs to better comply with the local laws without fear of being prosecuted, such as registering their activities in the host countries but also in Syria, and registering NGO employees and contractors;

ENGAGING MULTI-STAKEHOLDERS DIALOGUE

  • To continue and step up dialogue across sectors to seek new ways of mitigating key challenges and better sharing of risk;
  • To improve coordination and sharing of best-practice between the various ongoing initiatives already in place and to monitor and evaluate uptake of recommendations by governments and other actors;
  • To have more advices on how to navigate multiple sanctions regimes and wider regulation when various are in place;

RESEARCH & TRAINING

  • To analyze the unintended humanitarian consequences of various sanctions regimes in order to better understand them through ongoing research as well as collective coordination and evaluation;
  • To have more research is also warranted on international legal aspects of modern comprehensive sanctions, including IHL and Human Rights, which can be jeopardised through the need for humanitarian actors to avoid providing assistance to certain groups in breach of the Humanitarian Principle;