Sanctions Update: Canada, US, And EU Ease Syria Measures

Canada, the United States, and the European Union have each introduced significant — though not uniform — changes to their sanctions regimes targeting Syria. These developments open new pathways for humanitarian assistance, commercial activity, investment, and financial engagement, while simultaneously increasing the complexity of cross-border compliance obligations.

While the regulatory landscape is shifting toward relaxation, sanctions are far from eliminated. Businesses must continue to navigate substantial restrictions, heightened due diligence expectations, and divergent international frameworks.

1. Canada Announces Major Easing of Syria Sanctions

On February 18, 2026, Canada enacted the most extensive update to the Special Economic Measures (Syria) Regulations since their introduction.

Key Changes

• De-listing of 24 entities and one individual, including major state-linked institutions:
  • Commercial Bank of Syria
  • Syriatel
  • Syrian Air
  • Central Bank of Syria
  • Syrian Petroleum Company
• Repeal of prohibitions on:
  • Financial and related services involving Syria
  • Investments in Syria
  • Imports/exports of most goods (including luxury goods)
  • Sourcing goods from Syria
• New listing criteria now target:
  • Human-rights violators
  • Actors undermining peace, stability, or security in Syria
  • Associates and controlled entities of listed persons
• Six new designations under the revised human-rights criteria

What Remains Restricted

• Dealings with 240 listed persons
• Controls on chemical-weapons-related goods and technology
• Prohibitions on direct or indirect transfers of goods, property, or financial services to listed persons (including through foreign intermediaries)

Implications

Canada has reopened meaningful commercial opportunities in Syria, but the broadened definition of “ownership or control” and new indirect-transfer prohibitions create expanded compliance burdens.

2. US Repeals Caesar Act but Retains High-Risk Targeted Sanctions

On December 18, 2025, the US repealed the Caesar Syria Civilian Protection Act of 2019 as part of the FY 2026 National Defense Authorization Act.

What Changed

• End of broad secondary sanctions that had effectively isolated Syria from the global banking system
• Removal of automatic penalties for significant Syria-related transactions
• No “snapback” mechanism—reinstatement would require new legislation

What Still Applies

• SDN listings under anti-terrorism, anti-narcotics, and human-rights authorities
• Export controls under the EAR on sensitive goods and technology
• Ongoing sanctions targeting:
  • Hezbollah
  • ISIS
  • Captagon trafficking networks

Implications

Although secondary sanctions pressure has eased, US risk exposure remains high, and US and non-US financial institutions are likely to continue de-risking.

3. European Union Substantially Relaxes Sectoral Restrictions

On May 29, 2025, the EU lifted multiple sector-wide sanctions on Syria.

Key Easing Measures

• Removal of restrictions on:
  • Syrian energy sector (oil, gas, electricity)
  • Jet fuel and fuel additives
  • Luxury goods
  • Syrian-denominated banknotes
  • Insurance and reinsurance to Syrian government entities
  • Cargo flight bans
• Delistings of:
  • Central Bank of Syria
  • Syrian Arab Airlines

What Remains in Place

• Arms embargo
• Chemical-weapons–related goods & dual-use export restrictions
• Targeted asset freezes on numerous individuals and entities
• Telecommunications monitoring equipment prohibitions

Implications

Banking channels and international project financing are gradually reopening, particularly for humanitarian, development, and infrastructure-related activity.

4. Cross-Jurisdictional Compliance Risks Are Increasing

Divergence among Canadian, US, and EU sanctions frameworks is widening, not narrowing. Key risks include:

a. Inconsistent Listings Across Jurisdictions

An entity delisted in Canada may remain sanctioned in the US (SDN) or EU, creating trapped-funds risks, payment-flow issues, and counterparty exposure.

b. Indirect Ownership or Control

Canada's broadened criteria for indirect ownership and indirect benefit, combined with the US's strict SDN-50% rule, heighten the need for beneficial ownership mapping.

c. Bank De-Risking

Despite easing measures, many financial institutions — particularly US-linked banks — may continue to restrict Syria-related activity due to:

• SDN exposure
• AML/CTF concerns
• Reputational considerations

d. Humanitarian & Reconstruction Work

Although all jurisdictions have relaxed to facilitate humanitarian assistance:

• Dealings with listed persons remain prohibited
• Humanitarian actors must still maintain enhanced due diligence and documentation

5. Practical Takeaways for Businesses and Financial Institutions

a. Sanctions Have Eased — But Not Disappeared

Core risks persist, particularly regarding individuals and entities linked to the former Assad regime.

b. Enhanced Due Diligence Is More Important Than Ever

Businesses should implement:

• Beneficial ownership screening
• Geographic and sector-specific risk assessment
• Ongoing monitoring of counterparties

c. Reputational and Banking Risks Remain High

Stakeholders may question engagement in Syria-related activities even when lawful.

d. Opportunities Are Emerging

Humanitarian, development, and reconstruction-related sectors are expected to reopen, especially in the EU and Canada.

e. The Regulatory Environment Is Dynamic

Syria remains volatile; policy shifts may occur rapidly and without warning.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.