A phenomenon broader than sanctions

Many Russian citizens assume that if they are not named on the Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) List, hold no blocked assets, and face no individual restrictions, a US bank has no real basis to turn them away. In practice, Russians denied US bank accounts is a routine outcome, and it happens regardless of whether the applicant has ever appeared on any sanctions list at all.

The gap between what the law technically permits and what a bank is willing to do is the source of most of the confusion clients bring to this issue. Two separate questions get collapsed into one: what is prohibited by sanctions law, and what a bank’s own internal risk appetite allows.

Why banks close the door even when a client is not sanctioned

The answer is de-risking – the practice of exiting an entire category of clients or jurisdictions rather than evaluating each relationship on its individual merits. The Financial Action Task Force (FATF) and the US Treasury have both described de-risking as a global banking trend, not a policy specific to Russian nationals.

It is cheaper and safer for a bank to exclude the entire category of ‘Russian citizenship or Russian-origin funds’ than to staff a team capable of assessing each applicant individually. That is one reason Russians denied US bank accounts so often never receive an individualized review of their transaction history or personal reputation. The bank is reacting to a risk category, not a specific case file.

The role of correspondent banking relationships

Large US banks never operate in isolation. Dollar clearing runs through a network of correspondent banks, and the Bank Secrecy Act (BSA) together with anti-money laundering (AML) rules require ongoing monitoring of that flow and reporting of suspicious activity.

Any transaction connected to Russia increases the likelihood that a correspondent bank will demand additional justification or refuse to process the payment. Rather than put an entire correspondent relationship at risk over one client, a bank will often decline to open the account in the first place. Seen this way, Russians denied US bank accounts is frequently a decision shaped by the architecture of the payment system itself, not by anything the applicant did.

Enhanced due diligence and what Russian clients are asked to prove

Nothing formally prevents a bank from conducting enhanced due diligence (EDD) instead of declining outright. In practice, for clients with Russian citizenship or Russian-origin funds, that review demands proof of source of funds, source of wealth, beneficial ownership structure, business purpose for the account, and a detailed history of ties to Russia.

The Financial Crimes Enforcement Network (FinCEN) regularly flags jurisdictions carrying elevated sanctions and corruption risk for closer scrutiny. Many banks would rather skip the cost of that review altogether and decline the application at intake – another common reason Russians denied US bank accounts never make it past the first form.

Does SDN List removal guarantee an account opening or unfreezing assets?

Delisting eliminates the formal legal prohibition on dealing with a former SDN entry. However, it creates no obligation for a private bank to immediately open an account for that former designee or their relatives and business partners.

A bank remains free to apply its own, more conservative risk policy even once the law no longer requires a refusal. This is precisely why clients who have successfully completed the delisting process often find that their requests to unfreeze assets or to open a bank account are nonetheless denied, because the bank’s decision falls outside the scope of sanctions law as such.

How to reduce the risk of being turned away

The risk of refusal cannot be eliminated, but it can be meaningfully reduced. Corporate structure matters before the first bank meeting even happens. We covered the choice between a Delaware C-Corp and an LLC for the Russian-speaking entrepreneur in a separate article. The right structure removes several questions a bank’s compliance department would otherwise raise on its own.

It also helps to prepare documentation in advance: source of funds, a clear statement of business purpose, beneficial ownership structure, and a documented operating history. Applicants should also look beyond the largest national banks: regional and community banks, whose correspondent networks are less exposed to the largest dollar-clearing chains, are often more willing to evaluate a file individually.

What to do after a bank has already said no

US banks are generally not required to disclose the specific reason for declining an account, which makes the situation harder to navigate. Even so, it is worth requesting a reason in writing. Banks will sometimes point to a general category, such as compliance or geographic risk, and that alone can help shape the next application.

At this stage, involving an attorney who focuses on sanctions and compliance matters is worthwhile: preparing a documentation package that addresses the objections a compliance department is likely to raise, and identifying a bank whose risk policy is realistically compatible with the client’s profile. Careful preparation does not guarantee an outcome, but it meaningfully improves the odds and cuts down on wasted applications.

One qualification matters here. US attorneys are currently barred from providing corporate services, including assistance with opening a bank account, to clients who are ordinary residents of the Russian Federation. This restriction comes from a US Treasury determination issued under Executive Order 14071, which prohibits providing accounting, trust and corporate formation, and management consulting services to any person located in Russia. As a practical matter, this means an applicant can only retain a US attorney for help with this process if they reside outside Russia on an ongoing basis.