14 Crypto Operators and 90+ Banks Targeted in New EU-Russia Sanctions

The sanctions package agreed by the Council of the European Union on Monday, July 20, builds on a proposal from the European Commission earlier in the month. The measures use the usual Common Foreign and Security Policy process, meaning a listing subjects named individuals and entities to an asset freeze and makes it illegal for EU citizens and businesses to “make funds or economic resources available, directly or indirectly, to them.

Of the 94 banks targeted by the EU sanctions update, some have seen their assets frozen entirely. Others have been forbidden from receiving EU financial services, or from accessing euro-denominated clearing, effectively severing them from SWIFT-enabled correspondent banking relationships with EU member banks.

Note that these restrictions are targeting the 14 crypto operators, both with regard to servicing and facilitation. If you are an exchange set up in the EU, you can’t handle transactions on behalf of a designated operator. Additionally, you also cannot operate as an intermediary, indirectly making value accessible to them.

The key prohibition isn’t “don’t do business with Russia” but “do not facilitate a prohibited transaction” instead, which closes the door on nested and intermediated transactions that would otherwise slip through.

Blockchain brings transparency to financial crime prevention, but it can only go so far. Transactions are publicly viewable on the blockchain, but attribution has been the challenge.

This refers to accurately matching a wallet address to a real, verified individual. Therefore, criminals attempt to obfuscate this through a variety of sophisticated methods, such as value layering (transferring value between blockchains), using mixers to obfuscate coins’ origins by breaking them up into smaller amounts, operating multiple sub-accounts hidden within compliant exchanges, trading privately (peer-to-peer, over-the-counter) off of the exchanges’ order books, and using self-custodied wallets or stablecoins to eliminate bank relationships.

While blockchain analytics can help compliance teams surface high-risk wallets based on their transactional activity with known bad actors, determining with certainty who is in control of a crypto wallet often still requires IO. The impact of this hits home: if a benign wallet interacts with a mixer once, it can be falsely flagged. Investigating that false positive manually can be very time-consuming.

Stablecoins, flagged wallets, and exchange compliance duties

As they preserve dollar-like liquidity without a US or EU bank in the loop, stablecoins are of great matter here. When a wallet is linked to a sanctioned person or entity, VASP operating in the EU carry defined duties:

• Screen wallets and counterparties against the consolidated EU sanctions list onboarding and prior to settlement.
• Freeze assets where a positive match dictates instead of declining the transaction.
• Submit suspicious transaction reports to the applicable national financial intelligence unit.
• Share travel rule data where the transfer crosses that jurisdiction’s threshold.
• Store records to demonstrate the screening occurred.

Jurisdiction conflict becomes apparent. An EU designation does not always require action from a provider licensed in a non-mirroring nation, meaning the same wallet could be frozen in Frankfurt but opened with few questions elsewhere. That disconnect allows for route analysis arbitrage.

The first impact on the 94 listed banks is asset freezes, directly cutting them off. They also often trigger counterparty flight. The second sanction bans certain services, including euro clearing and access to correspondent banking. As such, counterparties cannot provide services such as trade finance if they delist each other.

Crypto exchanges and brokers subject to this regulation are now barred from serving sanctioned parties. They’ll have to screen wallets, freeze funds, and delist addresses associated with those entities. Fiat on/off ramps could start feeling pressure too. Anti-evasion measures also preclude attempts to bypass the rules through nested or third-country routing. Facilitation of such transactions will also be banned, leading to higher compliance costs for crypto firms.

The new sanctions aren’t an isolated act, as the EU rarely acts alone. The U.S., through its Office of Foreign Assets Control, and the U.K., through its Office of Financial Sanctions Implementation, maintain sanctions programmes that are closely coordinated with those of the EU, and where designations overlap they reinforce each other.

Additionally, many jurisdictions in Asia, the Middle East, Latin America and Africa will not adopt EU listings, and wealth can still be stored and transferred to these jurisdictions through commodity transactions, alternative messaging platforms that could replace SWIFT, and cryptocurrency-enabled cross-border payment systems. Sanctions are, of course, instruments of sovereign foreign policy. It is entirely up to a government as to whether they adopt an EU designation into their national law. Alignment can, therefore, be challenging.

For exchanges, brokers, custodians, and OTC desks, compliance isn’t a one-time check, but an ongoing process. A counterparty cleared today could be restricted tomorrow, which is why continuous monitoring matters most.

In practice, that means continuously screening for sanctions at onboarding and before every settlement, verifying the beneficial owners behind corporate accounts, using geolocation and IP checks to block access from restricted regions, scoring wallet risk through blockchain analysis, assessing risk across downstream banking partners, setting clear escalation steps for matches or near-matches, and keeping detailed records to support audits.

Stale data is the most common point of failure. Regularly re-screening against the latest sanctions list is what separates a protected program from an exposed one.

The new EU package on Russia increases pressure on crypto rails and legacy banking channels simultaneously, foreclosing channels that were running in parallel until now. Whether it will work, however, is not decided in Brussels. Compliance and enforcement will require cooperation across different legal areas, coupled with surveillance tech that can trace on-chain funds back to the individuals they benefit. The reality for compliance teams will be simple: whether liquidity is available will be contingent on ongoing screening, placing the risk of sanction evasion on the jurisdiction or rail that’s overlooked.