Executive summary

Informal financial mechanisms supporting hawala transfers from the Syrian diaspora, commercial entities, and humanitarian/development groups have been crucial for many within Syria. Centralizing their operations in Erbil due to its proximity to Autonomous Administration in North and East Syria (AANES)-controlled areas and lenient banking regulations, hawala operations faced disruptions in late 2023. Prompted by increased security by the US Treasury on Iraqi banks and policy changes introduced by the Central Bank of Iraq and AANES, hawala agents increased their fees for customers who also faced extended payment delays.

In this report, CA–SYR aims to unravel the uncertainty revolving around how hawalas function, what are the determinants for transfer fees, and how these policy changes led to increased hawala fees and payment delays. CA–SYR also looks beyond, examining the consequences of decisions in both Iraq and northeastern Syria while outlining potential repercussions in 2024 on humanitarian/development organizations in addition to households and markets.