Why does AANES restrict money transfers in eastern Syria?

The Autonomous Administration of North and East Syria (AANES) stated that the decision to ban money transfers to and from the areas under its control, which was issued about a year ago, aims to maintain monetary stability.

On September 25, Khalil al-Dhiab, head of the Anti-Money Laundering and Terrorist Financing office, told the official website of the Autonomous Administration that the instructions regarding money transfers across the borders were issued to maintain the stability of the local currency.

He added that it is allowed to carry up to 25 million Syrian pounds without any procedure (about $1,666), but for amounts from 25 to 100 million pounds (up to $6,666), it is required to submit a request to the Anti-Money Laundering Office by filling out the request form. As for amounts exceeding 100 million pounds, prior approval from the office itself is required.

Regarding money coming from inside Syria to areas under the control of the Autonomous Administration, it is allowed to carry up to 5,000 US dollars and 25 million Syrian pounds without the need for a permit, and any amount exceeding these values ​​requires filling out a request form .

As for those leaving northeastern Syria, they are allowed to leave without a permit if they are carrying up to 5,000 dollars. For amounts from 5,000 to 25,000 dollars, a declaration form approved by the customs administration must be submitted. Amounts exceeding 25,000 dollars require prior approval from the Central Monetary and Payments Office.

Regarding money transfers within areas under the control of the Autonomous Administration, it is allowed to transfer up to 200 million Syrian pounds and 25,000 dollars without any procedure, and any amount exceeding these values ​​requires prior approval from the central or branch office of the Monetary and Payments Office.

Al-Dhiab considered that these instructions aim to “enhance financial transparency and ensure the stability of the local economy,” which contributes to “combating money laundering and terrorist financing,” as he put it.

Reducing financial leakage

The Autonomous Administration uses the Syrian pound in its areas of control, making controlling aspects of the economic situation dependent on decisions made by the Syrian regime in Damascus, yet it may leave some room for the Autonomous Administration to influence some economic angles in its areas of control.

The Autonomous Administration has previously enacted a law regulating money transfers to and from its areas east of the Euphrates River, whether through the four control areas or through its borders with Iraqi Kurdistan.

According to what was published by the Autonomous Administration through its official accounts on December 11, 2023, the instructions include commercial bonds and transferable means of payment of all kinds unless the source and place are known.

AANES attributed its intent to achieving effective levels of preserving the financial system and monetary stability of the local currency by preventing the outward and inbound movement of local and foreign currencies as well as precious metals and gemstones.

The assistant researcher at the Jusoor Center for Studies, Abdul Azim al-Mugharbel, explained that the Autonomous Administration has the Monetary and Payments Office, which partially performs some of the roles of the central bank, such as imposing restrictions on money transfers to and from its areas of control, determining the exchange rate, giving licenses to exchange offices and remittance companies, among other roles.

I have added, to Enab Baladithat it is actually difficult for the Autonomous Administration to fully impose monetary and financial stability under the current circumstances and available capacities.

With the minimal available resources, the Autonomous Administration attempts to achieve some monetary stability through the issuance of some tools and laws aimed at reducing financial leakage and controlling the smuggling of foreign currency abroad, according to al-Mugharbel.

The researcher believes that AANES aims to reduce the instances of money laundering that occur without its knowledge, and seeks to reduce tax evasion, which naturally leads to partially enhancing the balance of payments and ensuring the continued influx of foreign currencies into its economy.

A difficult-to-track economy

It is difficult to track how the Autonomous Administration collects and spends its budget revenues, yet its main resources come from oil sales, taxes, and income fees, as well as duties on imported materials and goods, according to a study conducted by economic researcher Sinan Hatahet, published within the Middle East Directions Program in January 2020.

The study clarified that the Finance Authority is the central institution in the Autonomous Administration responsible for managing the region’s finances, noting that local councils also have the right to collect and impose taxes and gather revenues levied on most professions and crafts, including small businesses such as street vendors, shops, and public transportation.

The Autonomous Administration justifies these measures by stating that they aim to finance public services, but there is a general belief that the quality of service provision does not match the amount of collected taxes.