The European Union has taken decisive action by adding Russia to its blacklist of nations identified as posing a high risk for money laundering and financing terrorism. This decision follows insights from two EU officials and a review of pertinent documents.
FATF Suspension and EU Response
In the wake of Russia’s full-scale invasion of Ukraine, the Financial Action Task Force (FATF) suspended the country’s membership. However, despite clear evidence presented by the Ukrainian government, FATF refrained from formally blacklisting Russia, largely due to resistance from BRICS nations, which include Brazil, India, China, and South Africa.
Repeated calls from EU lawmakers prompted the European Commission to take action where FATF had stalled. Earlier this year, the Commission agreed to conduct a comprehensive review by the end of 2025, aiming to facilitate the removal of the United Arab Emirates and Gibraltar from the blacklist.
Implications of the Blacklisting
Draft documents reviewed indicate that the decision regarding Russia will be appended to the existing blacklist. The Commission has noted that the evaluation process has been hampered by insufficient information-sharing with Moscow.
Currently, the EU has implemented a range of sanctions that significantly restrict Russian firms’ access to its financial services. This latest blacklisting comes as the EU executive attempts to overcome Belgium’s reluctance to utilize revenues from Russia’s frozen assets to support Ukraine.
The newly established blacklisting will require financial institutions to enhance their due diligence on all transactions involving Russian entities, compelling banks that have not yet taken action to mitigate risks further.
Although the EU has traditionally aligned with FATF decisions, it has begun to operate independently since the establishment of its own Anti-Money Laundering Authority (AMLA). This authority is set to play a role in drafting the blacklist starting July 2027.
In a significant development, Dutch official Hennie Verbeek-Kusters, a former chair of the Egmont Group, is expected to join the AMLA executive board following a favorable hearing with lawmakers conducted behind closed doors. A vote on his appointment is scheduled for December 15, according to sources.