EC ¦ Commission adds Russia to List of High-Risk Jurisdictions to Strengthen International Fight Against Financial Crime

EU Formally Labels Russia a High-Risk AML/CFT Jurisdiction: What It Means for Financial Institutions

The European Commission has taken a significant step in its fight against financial crime by adding Russia to the EU list of high-risk third countries with strategic deficiencies in their anti-money laundering and counter-terrorist financing (AML/CFT) frameworks. For banks, payment institutions, fintechs, and other obliged entities, this is more than a political signal; it has direct, practical consequences for risk management and day-to-day compliance.

Background: How We Got Here

On 8 July 2025, the European Commission adopted Delegated Regulation (EU) 2025/1393. One of the key commitments in that Regulation was to complete, by the end of 2025, a review of third countries that:

• are not currently listed by the Financial Action Task Force (FATF);
• but whose FATF membership is suspended.

The idea behind this commitment was straightforward: FATF listing is a major international benchmark, but a suspended membership can also signal very serious systemic weaknesses in a country’s AML/CFT framework. The Commission therefore promised to look closely at such cases and decide whether changes to the EU’s own AML list were necessary.

Russia clearly falls within this category due to its suspended status in FATF. As a result, it became a priority case for the EU’s review.

The Commission’s Technical Assessment

To decide whether Russia should be formally listed as a high-risk third country, the European Commission carried out a technical assessment rather than relying solely on political considerations.

This assessment was based on:

• established methodologies developed for evaluating third-country AML/CFT regimes;
• information from public sources, such as international reports, open data, and public statements;
• input from Member States’ competent authorities;
• contributions from the European External Action Service (EEAS), which provided broader geopolitical and policy context.

Using this data, the Commission examined whether Russia meets the criteria for being designated a high-risk third country. These criteria relate to strategic deficiencies in the prevention of money laundering and terrorist financing, and the effectiveness of national frameworks in mitigating these risks.

The conclusion was clear: Russia meets the EU criteria for classification as a high-risk third country with strategic AML/CFT deficiencies.

Bastian Schwind-Wagner _Follow

"Russia’s inclusion on the EU list of high-risk AML/CFT jurisdictions marks a significant tightening of the EU’s financial crime defences. Financial institutions face immediate pressure to reassess Russia-related relationships, controls, and risk appetite. Compliance teams should prepare for more supervisory scrutiny of their Russia exposure and enhanced due diligence frameworks.

This development also underscores how quickly geopolitical shifts can translate into concrete regulatory obligations. Firms that embed flexible, risk-based approaches to sanctions and AML/CFT will be better positioned to adapt. Those that treat these areas in isolation risk control gaps and potential enforcement action."

Legal Basis: The 4th Anti-Money Laundering Directive

The move to list Russia is grounded in the 4th Anti-Money Laundering Directive (4AMLD). Under 4AMLD, the Commission is empowered to identify third countries whose AML/CFT regimes contain strategic shortcomings that pose a significant risk to the EU’s financial system.

Once such countries are identified, EU entities that fall under AML obligations — banks, financial institutions, and a broad range of other regulated entities — must apply enhanced measures to manage and mitigate the increased risks associated with these jurisdictions.

By listing Russia, the Commission is explicitly acting to:

• protect the integrity and stability of the EU financial system;
• reduce the risk that EU channels are used to launder proceeds originating from or passing through Russia;
• limit the use of EU financial institutions to fund terrorism or other serious crime involving Russian links.

Practical Implications: Enhanced Vigilance for EU Firms

For EU-obliged entities, Russia’s inclusion on the high-risk list translates into concrete compliance obligations.

Under the EU AML framework, relationships or transactions involving high-risk third countries trigger enhanced due diligence (EDD). While the detailed implementation may differ across Member States and institutions, firms should expect to:

• intensify customer due diligence (CDD) on Russian customers, beneficial owners, and counterparties;
• apply stricter scrutiny to business relationships and transactions with Russian links;
• collect more detailed information on the purpose and nature of business relationships involving Russia;
• increase the frequency and depth of ongoing monitoring, including transaction monitoring rules and alert tuning for Russian-related flows;
• reassess risk scoring for existing customers and counterparties connected to Russia, potentially leading to risk reclassification, additional controls, or in some cases de-risking.

This is not necessarily a blanket prohibition on Russian business, but it is a clear requirement to move beyond standard due diligence to more robust, risk-based controls. Institutions should also be ready for closer supervisory attention to their handling of Russia-related risks.

Next Steps: Scrutiny by Parliament and Council

The delegated regulation listing Russia does not apply immediately. Under the standard EU procedure for delegated acts:

• the European Parliament and the Council have one month to scrutinise the measure and decide whether to object;
• this scrutiny period can be extended by an additional month.

If neither the Parliament nor the Council objects within the applicable timeframe, the delegated regulation will enter into force and Russia’s status as a high-risk third country will become fully effective in EU law.

During and after this period, the Commission will continue to:

• monitor the progress made by all listed countries in addressing their AML/CFT deficiencies;
• track relevant developments, including changes in legislation, enforcement, supervision, and international cooperation.

The listing is therefore not necessarily permanent; it is tied to the country’s progress in remedying identified weaknesses. However, in practice, countries often remain listed for extended periods until they can demonstrate credible, sustained improvements.

Strategic Takeaways for Compliance and Risk Teams

For financial crime professionals in the EU, Russia’s listing should prompt an immediate review of existing frameworks and exposures, including:

• risk appetite statements related to Russia and Russian-linked customers;
• policy and procedure updates to reflect Russia’s high-risk status;
• transaction monitoring scenarios and thresholds for Russia-related activity;
• staff training material to ensure front-line and operations teams understand the new risk classification and associated controls.

Given that sanctions, geopolitical factors, and AML/CFT risks are increasingly intertwined, institutions should also ensure strong coordination between sanctions compliance, AML, and broader financial crime functions when handling Russia-linked business.

Further Resources

To frame Russia’s listing in the wider policy context, the following sources are key reference points:

• the 4th Anti-Money Laundering Directive (4AMLD), which sets out the general EU AML/CFT framework;
• the forthcoming Anti-Money Laundering Authority (AMLA), which will play a central role in harmonising and supervising AML/CFT standards across the EU;
• publications and guidance from the Financial Action Task Force (FATF), which remain the global benchmark for AML/CFT standards and assessments.

Russia’s addition to the EU high-risk list is a reminder that AML/CFT risk is dynamic and strongly influenced by international developments. For financial institutions, staying aligned with this moving landscape is not just a regulatory obligation but a core element of safeguarding their business against serious financial crime and reputational harm.

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