EU targets two Chinese banks over alleged crypto aid to Russia

The European Union is set to impose sanctions on two small Chinese banks accused of using cryptocurrency to help Russia dodge trade bans. If approved, this would be Brussels’ first move against a non-EU lender for aiding Moscow’s full-scale invasion of Ukraine.

Four officials familiar with the plans told FT that the proposed curbs were added to the European Commission’s latest package of measures. In order to take effect, they need all 27 EU countries to agree by vote.

Officials say the step would mark a clear escalation in the bloc’s efforts to hold China accountable for allegedly helping Moscow evade existing restrictions. Those restrictions were designed to cut off foreign supplies to Russia’s military-industrial complex.

Two small regional banks in China used crypto transactions to facilitate imports of goods that fall under current EU sanctions. The final list of targets could still shift during talks among member states.

Brussels hopes the move will pile more pressure on Russia, weaken its economy, and push Moscow back toward stalled peace talks with Ukraine. EU leaders also want to demonstrate that Europe remains firmly on Kyiv’s side in the conflict.

Officials add that the willingness of US President Donald Trump to back further Western sanctions at next week’s G7 summit in Canada will play a major role in whether the EU package gains enough support.

EU’s plan to single out Chinese banks comes at a delicate diplomatic moment

The EU is preparing for a big summit in Beijing with Chinese President Xi Jinping, which is scheduled for next month. Moreover, tensions over trade and security are already high.

Earlier on Wednesday, Commission spokesperson Paula Pinho said the aim of the new restrictions was “to avoid circumvention by creating alternative financing systems”.

Beijing has strongly criticised earlier EU steps against Chinese firms accused of helping Russia. It has denied supplying lethal weapons to Moscow and accused the bloc of showing “double standards” by continuing trade in other areas.

Last month, Chinese foreign ministry spokesperson Mao Ning warned that “normal exchanges and co-operation between Chinese and Russian companies should not be disrupted or affected”.

Trade between Russia and China reached $245 billion in 2024, double the level seen in 2020. At the same time, Russia has increasingly turned to the Chinese renminbi for international payments as it moves away from the dollar and other Western currencies.

Recent EU sanctions packages have focused on tightening existing rules, banning exports of military, dual-use, and sensitive goods to Russia, and closing transit routes that might be used to slip banned items through third countries.

Commission President Ursula von der Leyen said on Tuesday, “Putin’s ability to sustain the war very much depends on the support he receives from third countries. Those who support Russia’s war and the effort of conquering Ukraine carry a heavy responsibility.”