Banking Under Sanctions: Russians & Iranians Abroad

Bureaucracy Without Pain

Introduction

Opening a simple current account has never felt so… geopolitical.
Since 2022, Russian citizens have watched flagship banks disappear from SWIFT, while many Iranians have dealt with sanctions for decades. Both groups now face the same question every time they land in a new country:

“Will any bank on earth still let me open an account, and if so, how can I keep it open?”

As an international tax advisor, I spend a fair slice of my week un-knotting exactly that question. Today I’ll walk you through the mechanics—rules, timelines, costs, and the non-obvious pitfalls—so you can bank like a local instead of a pariah.

1. What It Is and Why It Matters

1.1 The Sanctions Landscape in Plain English

Sanctions are political tools. They do three practical things that affect you:

1. Restrict banking relationships – Your home bank might be cut off from correspondent banks, blocking outbound wires.
2. Trigger enhanced due-diligence (EDD) – Foreign banks must treat you as “heightened risk”. Extra forms, longer queues.
3. Freeze or reject transactions – Payments referencing sanctioned entities, sectors, or the wrong wording in the reference field can bounce back.

Crucially, being a Russian or Iranian passport holder is not the same as being a sanctioned person. Unless you’re on an official list (OFAC SDN, EU annex, UK HMT, etc.), you’re per se allowed to open accounts. Banks call this “sanctioned-country exposure,” not “designated individual.”

1.2 Why Banks Over-React

Compliance departments hate headline risk. One inadvertent breach can cost millions in fines, so the default is “decline and move on.” That over-caution is your actual obstacle, not the regulations themselves.

1.3 Why You Still Need a Local Bank

• Employers rarely pay salaries to a crypto wallet.
• Lease contracts often require a domestic IBAN.
• Utility companies and mobile carriers prefer direct debit.
• Card spending in local currency avoids the 3 % FX tax hidden in every swipe.

Having a local account also helps you build residency ties—a subtle but powerful factor when negotiating tax residence with two countries at once.

2. Step-by-Step Process

Below is the playbook I give clients relocating to Europe, the Gulf, or Southeast Asia. Adapt the jurisdiction specifics, keep the logic.

Step 0. Know Your Status

1. Check lists – Screen yourself on EU, OFAC, UN, UK sanctions lists. Use open-source tools like Dow Jones Sanctions, not random Telegram bots.
2. Document your anti-war or apolitical stance if relevant. Letters from employers, NGOs, or academic institutions can soften the compliance mood.

Step 1. Pick a Bank That Matches Your Risk Profile

Lower-tier or niche banks sometimes outshine the household names. Compare three models:

Tip: Prioritise banks outside the top-tier compliance feeding frenzy. In Berlin, for instance, regional Sparkassen often say “yes” after Deutsche Bank says “no.”

Step 2. Prepare Your Documentation

1. Passport + residence permit (if already issued).
2. Proof of address – Utility bill, tenancy contract, or a local mobile invoice. If you still use a SIM from home, consider switching; our guide on international phone plans explains how to keep your original number while generating local billing proof.
3. Tax identification number – From both home and host countries if available.
4. Source-of-funds dossier – Employment contract, pay slips, crypto trading logs, or sale-of-property documents. Package it in a single PDF to look organised.

Pro-Tip: Label every file YYMMDD_LASTNAME_type.pdf; compliance loves tidy filenames.

Step 3. Onboard—The First 30 Minutes

Most EU banks now film a video-KYC call. Expect these questions:

• “Do you hold public office or are you related to someone who does?”
• “Any income from defence or energy sectors in Russia/Iran?”
• “How will you fund the account?”

Answer directly, no narratives. They type while you talk.

Step 4. Survive the Cooling-Off Period

Accounts often open with limited functionality:

• Card only, no incoming wires.
• €1 000 transfer cap.
• No FX conversions.

The full unlock arrives once the bank’s “Level-2 compliance” approves your documents—typically two to ten working days.

Step 5. Keep the Account Alive

1. Set up a salary or periodic inbound payment—helps you look “sticky.”
2. Avoid large one-off crypto cash-outs; break them into smaller, documented tranches.
3. Respond to every compliance email within 48 h. Silence triggers suspicion.

3. Costs and Timelines

3.1 Account Opening Fees

• Most retail banks in Europe: €0–€20.
• Fintech apps: €0.
• Private banks: onboarding fee €1 500–€5 000 plus annual maintenance 0.5 %.

3.2 Monthly Charges

3.3 Transfer & FX

Sanction filters add time more than money:

• SEPA: still next-day, but compliance review can add 48 h.
• SWIFT: 3–5 days if involving USD; USD correspondents run extra checks.
• FX spreads: 0.2 % for fintech, 1.5 % for brick-and-mortar.

3.4 Timelines Recap

• Document gathering: 1–2 days if you’re organised.
• KYC video call: 15 minutes.
• Compliance review: 2–10 business days.
• Card arrival: 3–14 days, depending on postal speed.

Total: Under three weeks if nothing goes sideways.

4. Common Mistakes to Avoid

4.1 Mixing Personal and Business Funds

Running your one-person SaaS revenues through the same account you use for grocery shopping is a compliance red flag. Open a second account or sub-account dedicated to business income.

4.2 Ignoring Country-of-Birth Fields

Even if you hold a second passport, many forms ask for “country of birth.” Hiding it invites account closure down the line. Transparency beats amnesia.

4.3 “Test Transfers” with Sanctioned Banks

Sending €10 from your Russian card “just to see if it lands” can trigger an irreversible block. Use non-sanctioned intermediaries—Kazakh, Armenian, or Georgian banks—to bridge funds legally.

4.4 Cash Fetish

Carrying €15 000 in a suitcase because you assume banks will say no is both risky and reportable at Customs. Declare any amount over €10 000 when entering the EU, or face seizure.

4.5 Over-Engineering With Shell Companies

Opening a Belize LLC to mask your nationality is 1990s thinking. Today, beneficial-owner registers expose you in five clicks. Stay simple, stay direct.

5. Tax & Reporting Considerations

5.1 CRS and FATCA—You’re Not Invisible

• Common Reporting Standard (CRS) obliges most banks worldwide to share balance data with your country of tax residence.
• FATCA affects only U.S. persons, but some compliance teams mistakenly treat it as global. Clarify if you are not a U.S. person.

5.2 Dual-Tax Residence Risks

Holding residence permits in multiple countries? Each may claim tax rights on worldwide income once you pass their presence thresholds. Banking data is the first breadcrumb auditors follow.

To reduce ambiguity, establish stronger ties—housing, family, primary bank—in a single jurisdiction. Our Lithuania Startup Visa guide explains how the Baltic route gives you both residence and a straightforward 15 % corporate tax regime.

5.3 Declaring Foreign Accounts

• In Germany, file Form KAP.
• In France, it’s 3916-BIS.
• In Canada, T1135 if balances exceed CAD 100 000.

Failing to declare can cost more than the original sanctions headache.

6. Case Studies

6.1 Anna, Russian UX Designer in Lisbon

• Picked Banco CTT—a postal bank nobody talks about.
• Provided work contract with a Dutch remote employer.
• Account approved in four business days, but first transfer >€5 000 held for manual review. Released after she emailed an invoice pdf.

Key takeaway: pre-emptively attach invoices when you send larger amounts.

6.2 Reza, Iranian PhD Student in Milan

• Went fintech first (N26), got rejected post-KYC.
• Switched to Banco BPM; campus housing lease served as proof of address.
• Monthly stipend from an EU research grant allowed the bank to treat funds as “EU-sourced,” reducing sanctions screening pressure.

Key takeaway: Payments originating within the EU process smoother than cross-border wires from Tehran.

7. Frequently Asked Questions

Q: Can I open a bank account before obtaining a residence permit?
A: In most of the EU, yes—a six-month tourist stamp can suffice if your passport is accepted. Expect lower limits until you get a residence card.

Q: Will using crypto exchanges bypass sanctions?
A: Exchanges themselves are now under the same sanction screening as banks. They can freeze accounts without notice. Use crypto only as a bridge, not an endpoint.

Q: How much money is “too much” in the first transfer?
A: Any amount inconsistent with your stated income. For a €5 000 monthly salary, wiring €50 000 at once screams stress-test to compliance.

8. The Bottom Line

Banking under sanctions is less about loopholes and more about disciplined paperwork. The majority of Russian and Iranian nationals are not personally sanctioned; they’re simply collateral in a compliance arms race. By selecting the right bank, presenting clean documentation, and respecting ongoing scrutiny, you can operate almost as smoothly as any other expat.

Bureaucracy becomes painless when you feed it exactly what it wants—no more, no less.

Ready to put these steps into action? Create your free relocation plan with BorderPilot and get a customised banking checklist for your next destination—no jargon, just a clear path forward.