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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The writer is a fellow at the Carnegie Russia Eurasia Center in Berlin
On November 1, thousands of Russians living legally in Europe found their Revolut bank accounts frozen. Students, long-term residents, anti-Putin activists who’d fled years ago: their shared liability was their Russian passport. Legal experts agree EU sanctions do not prohibit servicing legal residents. Revolut proceeded anyway.
Its co-founder, Nik Storonsky, blamed regulatory pressure. “The regulator’s expectations can be much stricter than the legislation itself,” he explained in an interview. “We are forced to comply.” In other words, western financial systems amplify Russian repression through risk-averse compliance that cannot distinguish Putin’s critics from his enablers.
Having previously tried to abuse Interpol’s red notice system to order the arrest of its enemies such as the financier Bill Browder, Russia has now refined its approach, exploiting the know-your-customer and anti-money laundering infrastructure underpinning western banking.
Russia’s financial intelligence unit often labels dissidents as “terrorists” or “extremists.” A late 2024 law expanded the unit’s powers to designate anyone for “disseminating false information” or “threatening territorial integrity”. Russia’s blacklist now contains over 16,000 names, including people whose only crime was to criticise the Kremlin.
That information is aggregated by the three dominant compliance providers — Dow Jones, LexisNexis, and Refinitiv (now LSEG) — whose databases are used by financial institutions around the world. When a person’s status changes, banks receive terrorism notifications. The process is over 95 per cent automated. Banks then choose whether to investigate further or simply terminate the relationship.
Given that regulators impose steep fines for missed risks (TD Bank paid $3.09bn in 2024 for enabling money laundering), but no penalties for excess caution, the choice is obvious. Once assets are frozen in Russia, the damage is devastating and extends globally. Western banks demand additional documentation or close accounts. It is difficult and expensive to clear one’s name.
Russia isn’t alone. The mechanics are simple for autocracies: they merely expand domestic counterterrorism legislation. Designations then flow automatically into global compliance systems. Belarus maintains similar lists including entire payrolls of human rights groups and independent media. Turkey has submitted over 3,500 red notice requests to Interpol since 2016 targeting Gülen movement members and journalists. China has issued numerous red notices pursuing Uyghurs and Hong Kong democracy activists.
The fundamental problem lies in how the Paris-based Financial Action Task Force sets standards. FATF requires countries to designate terrorists; it then checks procedures — such as whether accounts are frozen correctly — but not whether the terrorism label is justified, opening the system to wholesale abuse.
Data providers merely aggregate information without passing judgment. When Belarus or Russia designates someone a terrorist, that fact gets recorded without context. The result is what the World Bank calls “de-risking”; banks reject entire categories of clients rather than evaluating individual cases.
Last year, Dmitry Navosha, a Belarusian media manager, lost a UK appeal against being blacklisted in compliance databases. The UK Information Commissioner’s Office stated it cannot challenge Belarusian court decisions — however questionable their legitimacy.
The solution is to track indicators of abuse. When a country adds 300 people monthly to terror lists and 10 per cent are minors, that signals systematic misuse. FATF and independent observers could maintain lists of abusers and require enhanced scrutiny of their designations. Banks need regulatory safe harbour for servicing individuals with asylum or protected status from autocracies.
Currently, over-compliance is rewarded, and servicing legitimate refugees is punished. That must be reversed.
Individuals need recourse: direct appeals to data providers with independent review panels for politically motivated listings, and fast-track processes for asylum holders to shift the burden of proof to designating countries. Otherwise, it remains impossible for people to clear their names.
This abuse tactic offers everything authoritarian regimes could want: a consequence-free way to extend repression globally while remaining within the international legal framework. Unless regulators act, this transnational repression will spread.