The European Union is preparing new measures aimed at tightening financial pressure on Russia, with a draft proposal that would add several banks from Laos, Tajikistan, and Kyrgyzstan to its sanctions framework over their alleged role in providing crypto-asset services linked to Russian entities.

The move reflects growing concern in Brussels that digital financial channels are increasingly being used to bypass restrictions imposed after Russia’s invasion of Ukraine. As traditional banking access has narrowed under successive rounds of sanctions, regulators say alternative systems—including crypto transactions and smaller cross-border financial networks—have taken on greater importance.

According to the draft, the targeted institutions are suspected of facilitating services that enable Russian clients or intermediaries to access digital assets or move funds outside the reach of Western financial controls. EU officials have been working to close such gaps as part of a broader effort to prevent circumvention of existing measures.

The proposal highlights how the financial landscape surrounding Russia has evolved over the past two years. With major Russian banks cut off from parts of the global financial system, businesses and intermediaries have turned to new jurisdictions and emerging technologies to maintain trade flows and payment channels. Smaller banks in third countries have, in some cases, become critical links in these alternative networks.

European policymakers have increasingly focused on what they describe as “circumvention risk,” targeting not only Russian entities but also foreign institutions believed to be enabling restricted transactions. The approach mirrors earlier actions aimed at shipping companies, trading intermediaries, and logistics providers involved in rerouted oil and goods.

For the countries involved, the proposal underscores the growing reach of Western sanctions into regions that maintain economic ties with Russia while seeking to balance their own financial stability and international relationships. Governments in Central Asia and Southeast Asia have often walked a careful line, attempting to preserve access to multiple markets amid competing geopolitical pressures.

The draft measures are part of a wider EU effort to address the role of crypto-assets in sanctions evasion. European regulators have expanded oversight of digital asset service providers, emphasizing traceability, compliance standards, and cooperation with international partners.

Any new listings would require approval from EU member states and could be revised during negotiations. If adopted, the measures could restrict the named banks’ access to European financial systems and increase scrutiny from international counterparties.

The proposal reflects a broader shift in sanctions enforcement, as authorities move beyond traditional banking controls to follow the pathways of digital finance—an evolving arena where regulation, technology, and geopolitics increasingly intersect.