The EU has placed Russia on the list of high-risk money laundering countries: comprehensive scrutiny of Russian citizens in Europe creates an impact.
30/01/2026
On February 26, the Official Journal of the European Union formally announced the decision to include Russia in the list of high-risk third countries, which is fully titled as Jurisdictions with Strategic Deficiencies in Anti-Money Laundering and Countering the Financing of Terrorism. This resolution, proposed by the European Commission and approved by the European Parliament and the Council of the European Union, took effect on the day of its publication. Alongside Russia, Bolivia and the British Virgin Islands were also added to the list. This move signifies that the EU's sanctions against Russia have entered a new, more systematic phase, with its core focus being the mandatory requirement for all banks and financial institutions within the EU to implement enhanced due diligence on any financial transactions involving Russian individuals, enterprises, or entities. For the hundreds of thousands of Russian citizens living in the EU, Russian businesses engaged in dealings with Europe, and ordinary Russians attempting to conduct cross-border payments through the European financial system, this is no longer merely targeted sanctions against specific entities but a comprehensive escalation of financial identity scrutiny.
The technical core of the new regulations and their immediate enforcement power.
From a technical perspective, the effectiveness of this list far exceeds that of any individual sanctions package. Over the past two years, the European Union has passed nineteen rounds of sanctions against Russia, but those measures primarily targeted specific Russian banks, oligarchs, military-industrial enterprises, and officials. Financial institutions' compliance departments only needed to screen against the constantly updated sanctions list. However, this time, designating Russia as a whole as a high-risk jurisdiction is based on the framework of the "Anti-Money Laundering Regulation Package" adopted by the EU in 2024. This framework grants the EU the authority to independently designate risk countries, no longer relying entirely on the list from the international anti-money laundering organization, the Financial Action Task Force (FATF).
According to new regulations, fundamental changes have occurred in the legal obligations for all obligated entities within the European Union—including banks, payment institutions, cryptocurrency exchanges, lawyers, accountants, and even high-end goods dealers—when handling any transactions related to Russia. They must implement enhanced customer due diligence measures. This specifically means: more detailed information on the ultimate beneficial owners of funds must be collected and verified; a deeper understanding of the commercial purpose and economic rationale behind transactions is required; continuous monitoring of fund sources must be conducted; and any unusual or complex transactions must be reported to the national financial intelligence agency. Analysis from the Polish Center for Eastern Studies indicates that this essentially sets an extremely high compliance threshold for any financial activities related to Russia. From the perspectives of risk management and cost, banks are likely to choose the simplest approach: denying services or significantly extending processing times. Data shows that EU-Russia trade volume fell to approximately 13 billion euros in the third quarter of 2025, the lowest level since 2002, with Russia accounting for only about 1% of the EU's foreign trade share. The new regulations are expected to push this figure even lower.
EU-Russian Citizens: From "Specific Targets" to "Comprehensively Suspect"
This policy shift has had the most direct and personal impact on Russian citizens living in the European Union. It is estimated that there are hundreds of thousands of Russian citizens residing long-term in the EU, including international students, business professionals, opposition activists, journalists, and families who immigrated many years ago. Previously, banking service issues they faced were often attributed to the internal risk policies of individual banks. A Russian IT engineer who has lived in Berlin for fifteen years revealed to the media that last year, his personal account was frozen for two weeks. The bank required him to provide proof of income from the past three years, all contracts related to transactions with Russia, and an explanation for a small remittance from his mother.
After the new regulations take effect, such individual cases will evolve into a systemic norm. There are no exceptions to enhanced due diligence. Whether it is exiled opposition figures who have publicly criticized the Kremlin, journalists working for independent media, or ordinary Russian residents who have long obtained permanent residency in the EU, in the eyes of the banking system, their status as Russian citizens first triggers a high-risk alert. This means: the process of opening a new account will become extremely lengthy, with the required documents multiplying; receiving any remittances from Russia (even gifts from relatives) may face weeks or even months of scrutiny and require proof of the source of funds from the sender; using EU bank cards for online payments related to Russian IP addresses may be automatically blocked; and even daily transactions such as paying rent or utility bills may trigger compliance reviews if the bank's algorithm detects that the shareholder structure of the recipient has potential ties to Russia.
A compliance expert from the European Banking Federation, who wished to remain anonymous, stated that to avoid potential massive fines and reputational risks, banks are likely to configure their internal systems with stricter automatic filtering rules. The algorithms do not differentiate between whether the remitter is an ordinary citizen or an oligarch. When 'Russia' becomes a trigger keyword, the demand for manual review will surge dramatically, and banks lack sufficient personnel to handle it. The result is that a large number of transactions are delayed or outright rejected. This essentially constitutes a silent financial segregation against Russian citizens within the framework of EU law.
The Paradox of Narrowing Payment Channels and the "Shadow System"
The other profound impact of the new regulations lies in squeezing alternative channels for Russia's cross-border finance. Over the past two years, many Russian individuals and enterprises have used banks in Central Asian countries (such as Kazakhstan, Kyrgyzstan, Armenia), the UAE, Turkey, and other regions for intermediary payments to circumvent Western sanctions. The EU's current list mechanism includes a key provision: EU banks should maintain heightened vigilance toward financial institutions in third countries that have close business dealings with high-risk nations and may review or even terminate correspondent banking relationships with them.
This presents banks in Central Asia and other regions with a stark choice: continuing to provide extensive services to Russian clients risks losing access to the European banking system, which serves as a lifeline for U.S. dollar and euro clearing; to preserve correspondent banking accounts, they must significantly reduce or even halt Russia-related business. This pressure is rapidly spreading. In January of this year, some Kazakh banks began requiring Russian clients to provide more complex documentation and imposing transaction limits. Meanwhile, alternative payment systems promoted by Russia itself—such as local currency settlement arrangements with certain countries and increased attempts to use cryptocurrency—still cannot match the efficiency, cost-effectiveness, and scale of the traditional Western financial system.
A paradox lies in the fact that the severe measures aimed at isolating Russia are also objectively driving the further deepening of its shadow economy and evasion networks. According to public shipping data, tankers referred to by Western media as Russia's shadow fleet still transported nearly 5 million barrels of oil per day in December 2025, accounting for about 11% of global seaborne shipments. However, studies show that once a vessel is listed on sanctions-related lists, its operational efficiency declines by 30% to 70%. The EU's new financial list precisely attempts to replicate this efficiency penalty at the level of capital flows, making any business activity related to Russia slow, costly, and fraught with uncertainty, thereby weakening its economic potential as a whole.
Geopolitical Financial Games and the EU's Declaration of "Strategic Autonomy"
Placing Russia on the high-risk list marks a symbolic step for the European Union in the geopolitical and financial power game. For a long time, the global standard-setter for anti-money laundering has been the Financial Action Task Force (FATF), headquartered in Paris. Russia became a member in 2003 and was suspended in 2023 due to the war in Ukraine. However, with opposition from BRICS members such as China, India, Saudi Arabia, and South Africa, FATF has consistently refrained from placing Russia on its strictest blacklist. By taking independent action and making its own assessment based on its own standards, the EU reflects its intention to advance financial strategic autonomy. In 2025, the newly established EU Anti-Money Laundering Authority (AMLA) will begin operations, aiming to centrally oversee the largest cross-border financial risks within the EU, further strengthening its capacity for independent action.
The European Union's High Representative for Foreign Affairs and Security Policy, Kaja Kallas, emphasized when announcing the decision that it was based on a technical assessment, pointing out strategic deficiencies in Russia's financial intelligence agency independence, transparency of beneficial ownership, cryptocurrency regulation, and international cooperation. These statements directly link Russia's financial system to risks of corruption, sanctions evasion, and war financing, severely damaging its international reputation. For third countries that still maintain trade relations with Russia, such as India and China, their financial institutions will have to additionally consider the EU's regulatory stance when cooperating with Russian enterprises in the future, thereby increasing transaction costs and complexity.
From a broader perspective of the history of sanctions evolution, this move signifies a shift in economic pressure on Russia from surgical precision strikes to carpet-like systemic isolation. The goal is not only to cut off the Kremlin's war funding but also to impose widespread social and economic pressure by increasing the costs for all Russian state actors, enterprises, and citizens to participate in the global financial system. The effects will not be immediate but will slowly erode, like a tide, the foundation of all international economic activities related to Russia.
In the coming month, the European Parliament and the Council of the European Union could theoretically still raise objections, but the prevailing view in Brussels is that this is almost impossible to happen. The list's enactment is a foregone conclusion. Next, the focus of observation will shift to how financial institutions across EU member states implement enhanced due diligence in practice, and how Russian individuals and enterprises adapt to this unprecedented financial winter. When every remittance could become an event requiring explanation, and every account may face the risk of freezing, Russians living in Europe stand at the threshold of a new era—one characterized not by open hostility, but by a cold, systemic scrutiny deeply embedded in banking protocols and compliance algorithms.