EU Adds Russia to Anti-Money Laundering Blacklist, Intensifying Financial Scrutiny

EU Implements Strict Financial Controls on Russia

The European Union's decision to include the Russian Federation on its list of high-risk third countries with strategic deficiencies in their anti-money laundering (AML) and counter-financing of terrorism (CFT) regimes officially entered into force on January 29, 2026. The European Commission had initially adopted this measure on December 3, 2025, following an assessment of Russia's financial system. This designation is expected to significantly increase economic pressure on Russia and further tighten the EU's existing sanctions regime.

Reasons for the Designation

The European Commission's assessment highlighted several critical shortcomings in Russia's financial crime frameworks. These deficiencies include a failure to comply with international standards set by the Financial Action Task Force (FATF). Specific concerns raised by the Commission encompass:

• Lack of independence of Russia's financial intelligence unit, Rosfinmonitoring.
• Insufficient cooperation with foreign counterparts, particularly in the exchange of crucial financial information.
• Inadequate transparency regarding the ultimate beneficiaries of transactions.
• Poor tracking of crypto-asset transfers.

According to the Commission, these gaps have been exploited for purposes such as money laundering, financing terrorism, and evading sanctions. Furthermore, Russia's close cooperation with the Democratic People's Republic of Korea (DPRK), a country already blacklisted by both the FATF and the EU, was also cited as a contributing factor.

Impact on Financial Transactions and Businesses

The inclusion of Russia on the EU's AML blacklist mandates enhanced due diligence obligations for financial institutions across the bloc. EU entities will be required to apply strengthened controls on any transaction involving individuals or entities linked to Russia. This entails:

• Increased verification of the origin of funds.
• More rigorous identification of beneficial owners.
• A higher risk of sanctions for non-compliance with AML/CFT regulations.

This measure is anticipated to complicate trade relations for EU companies, necessitating a review of supply chains and an expectation of delays and additional costs. Some banks may opt to reduce or terminate relationships with Russian clients due to heightened risks, a phenomenon known as the 'de-risking effect'. Russian nationals, particularly those residing in EU countries, may also face banking difficulties and transfer restrictions. The decision could also pressure Central Asian banks, which have been used for Russian remittances, to choose between maintaining ties with Russian clients or risking their correspondent accounts in the EU.

Divergence from FATF Stance

Notably, the EU's decision to blacklist Russia diverges from the stance of the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog. While the FATF suspended Russia's membership in February 2023 due to its 'war of aggression' against Ukraine, it has not placed Russia on its grey or blacklists, despite persistent calls from Ukraine. The EU's move underscores its independent assessment and determination to impose stricter financial controls on Moscow.