The European Union has formally added Russia to its list of high-risk countries for money laundering and terrorist financing, a move finalized December 3, 2025, and intended to curb illicit financial activity stemming from the ongoing conflict in Ukraine. The designation subjects Russian citizens and entities within the EU to considerably increased financial scrutiny, building on existing sanctions and a broader effort to close loopholes exploited to evade restrictions. this action follows Russia’s reciprocal barring of European nations from its financial data exchange systems and underscores the escalating financial countermeasures being deployed against moscow.
The European Union has added Russia to its list of high-risk countries for money laundering and terrorist financing, a move that will subject Russian citizens living within the bloc to increased scrutiny from banks and financial institutions.
The decision, finalized on December 3, 2025, and taking effect immediately after review by the European Parliament and the Council of the EU, comes as concerns mount over illicit financial flows linked to the ongoing conflict in Ukraine. It also follows Russia’s systematic exclusion of most European nations from its financial data exchange systems.
Under EU law, any dealings with banks sanctioned by the bloc are now considered a crime, potentially punishable by up to five years in prison. Legal experts are advising individuals to close accounts with sanctioned banks, a particularly complex issue for those designated as “foreign agents” in Russia, who are legally required to maintain accounts with Sberbank and are prohibited from closing them.
The move is an attempt to deepen financial oversight within the EU and uncover schemes designed to circumvent existing sanctions, especially as all member states were mandated to strengthen penalties for sanctions violations by May 20, 2025. Since the annexation of Crimea in 2014, and significantly expanded following the full-scale invasion of Ukraine, the EU has imposed sanctions on numerous Russian individuals and entities, including major banks.
Ukraine had been urging the EU to add Russia to the “blacklist” since at least 2023. While the Financial Action Task Force (FATF), an international organization combating financial crime, froze Russia’s membership in 2023 citing the invasion of Ukraine, it stopped short of adding Russia to its high-risk list, a move that would have triggered even stricter global financial checks.
The European Commission had been preparing to add Russia to the list as early as the summer of 2025, joining countries already designated as high-risk, including Afghanistan, Iran, North Korea, and Monaco.
While the Commission clarified that the listing does not directly affect Russians living and doing business outside the EU who use foreign financial institutions, it confirmed that enhanced due diligence will be implemented on financial operations linked to Russia. This “enhanced due diligence” – a standard term in the banking sector – will require institutions to gather additional information on Russian clients, including the purpose of transactions, the source of funds, and the nature of their relationship with the bank. Approvals for accounts will require higher-level authorization, and monitoring will be increased.
Responses from EU member states have been varied, with many unable to provide specific details on how the new rules will be implemented. Finland, for example, stated that citizenship alone should not be the sole basis for increased scrutiny, while Germany, Estonia, and Latvia confirmed they would be increasing checks on Russian citizens. Latvia also maintains its own national “blacklist” of countries, which already includes Russia.
The inclusion of Russia on the EU list will also be reflected in databases used by compliance firms, which financial institutions rely on to vet clients. These systems will automatically flag Russian citizens and the country itself as potentially high-risk, potentially leading to service denials or requests for extensive additional documentation.
Banks outside the EU have also begun freezing transactions involving Russian citizens. Instances of this have been reported in Armenia, Serbia, and increased scrutiny has been applied to transactions by Russians in Kazakhstan, Tajikistan, and Oman since late December 2025. Banks in the Eurozone have also reportedly begun blocking transfers from Russian citizens in early 2026, with issues arising with financial institutions in France, the United Kingdom, and Finland.
Violations of the sanctions regime could result in penalties of up to five years in prison, according to EU Directive 2024/1226, which establishes minimum common European rules for criminalizing and punishing sanctions breaches. While the directive sets a threshold of 10,000 euros below which prosecution is not mandatory, individual member states can choose to criminalize smaller amounts.
The situation raises concerns for Russians living in the EU who utilize accounts at sanctioned banks, often for purposes such as paying utilities or supporting family members. The directive may also apply to tourists.
Financial intelligence units in Estonia and Finland have offered differing interpretations regarding tourists, with Estonia suggesting each transaction should be assessed individually and Finland stating the restrictions do not apply to tourists, though the final decision rests with prosecutors. Some EU countries already possess information on Russian citizens’ bank accounts, collected during visa applications.
EU regulations prohibit providing funds or economic resources – directly or indirectly – to sanctioned individuals and entities. According to officials in Finland, transferring funds to a sanctioned bank is prohibited. They also warned that conducting transactions within Russia, even through mobile applications, could constitute a sanctions violation.
Latvia’s financial intelligence unit stated that any operations involving a sanctioned bank, whether incoming or outgoing, violate the law. Simply holding an account at a sanctioned bank, even if not actively used, could be considered a violation, as it provides resources to the sanctioned entity.
Concerns are also emerging about the potential need for Russians in the EU to seek permission for almost any action involving a sanctioned bank, particularly if they are unable to close their accounts.
The situation is particularly challenging for individuals designated as “foreign agents” in Russia, who are compelled to open accounts at Sberbank, a sanctioned institution. The Finnish financial regulator suggested that merely holding such an account is not prohibited if it is not used, while legal expert Marita Gorgiladze believes these individuals are unlikely to be considered sanctions violators, given the coercive circumstances of account opening.
Gorgiladze advises “foreign agents” to document all aspects of their Sberbank accounts, including proof of forced opening and inability to close them.
Authorities in Latvia and Finland advise individuals to terminate all relationships with sanctioned banks to avoid potential criminal liability. However, it may be possible to maintain an account if it can be demonstrated that it is necessary for basic needs – housing, food, medicine, and childcare – and if no alternative banking options are available.
Experts recommend avoiding opening or using accounts at sanctioned banks and transitioning to non-sanctioned institutions. The practical interpretation of the new legislation remains unclear.
The issue is further complicated by a pending bill in the Russian State Duma that would impose penalties on businesses complying with foreign sanctions, potentially forcing them to conceal the reasons for closing accounts at sanctioned banks.
