US Executive Order 14114 tightened bank screening for pharma payments in friendly countries in 2026
A payment for a batch of active pharmaceutical ingredients from Turkey or the UAE leaves a Russian bank in a single day. Then it sits at the correspondent bank for three to four weeks, even though the goods appear on no sanctions list at all. The reason is that the correspondent bank is now required to screen not just its own client, but the entire supply chain down to the end buyer. Neither the counterparty nor the goods are listed on any sanctions list.
For a pharma company’s regulatory and finance director, this adds a new variable to import planning. A payment delay on critical raw materials can halt production well before the registration dossier or certificate of conformity runs out.
How Payments Through Friendly Countries Used to Work
Until late 2023, the arrangement was simple. A Russian company opened an account at a bank in Turkey, the UAE, or Kazakhstan, transferred funds for the goods, and the correspondent bank checked sanctions lists and cleared the payment. The check took two to three days and relied on standard KYC (Know Your Customer): who the recipient is, whether they appear on the SDN list (Specially Designated Nationals, OFAC’s list of specially designated persons), and whether the amount matches the contract.
During this period the Bank of Russia kept the mirror currency-control measures introduced in 2022: a $1 million monthly limit on individuals’ transfers abroad, and restrictions on fund withdrawals for non-residents from unfriendly states. For legal entities, including importers of pharmaceutical ingredients and medical equipment, the decisive factor was simply whether a foreign bank was willing to open an account for a company with Russian ownership at all. The Bank of Russia’s position on the matter carried almost no weight.
Compliance departments in friendly jurisdictions screened a counterparty once, at account opening. Later payments went through a simplified process as long as the amount and stated purpose did not change sharply.
What Changed for Bank Payments
Several decisions reshaped conditions for banks in friendly countries, and almost none of them were made in Russia.
On 22 December 2023 the US president signed Executive Order No. 14114, expanding the powers of OFAC (the US Treasury’s Office of Foreign Assets Control). The order allows secondary sanctions against any foreign financial institution that carries out a significant transaction benefiting Russia’s military-industrial base, even without a direct US connection. The definition covers not just arms supplies but broad sectors: technology, aerospace, construction, manufacturing. A bank in the UAE or Turkey gets no chance to prove its innocence first. Mere suspicion from a regulator is enough for the bank to lose its dollar correspondent account and effectively end its international business.
For the pharma industry the practical effect is direct: a bank now assesses payments for lab equipment, components for API production, or packaging lines through the lens of dual-use goods. Belonging to the pharmaceutical sector plays no role in that assessment. A compliance department checks the HS code on a chromatograph or centrifuge against export-control lists, even when the equipment is bought for routine quality control.
Turkish banks reacted to Order 14114 faster than other friendly jurisdictions. From late December 2023, private Turkish banks began cutting correspondent relationships with Russian credit institutions en masse and freezing dollar payments. Settlement in national currencies continued, but selectively: banks kept clearing payments through a so-called green corridor covering food, textiles, and pharmaceutical goods. For importers of medicines and raw materials, the practical takeaway is that payments in lira or rubles through state-owned Turkish banks go through more reliably than the same deal attempted in dollars through a private bank.
On 3 December 2025 the European Commission added Russia to its own list of high-risk money-laundering and terrorist-financing countries. The decision took effect on 29 January 2026, twenty days after publication in the EU’s Official Journal. For banks this means mandatory Enhanced Due Diligence (EDD) on any transaction with a Russian element, including payments routed through third countries, whenever a bank under EU jurisdiction sits in the chain.
The Bank of Russia moved the opposite way over the same period. On 5 December 2025 the regulator announced it would lift, from 8 December, the limits on foreign-currency transfers abroad for Russian citizens and non-resident individuals from friendly countries. The decision applies to individual transfers and does not affect pharma companies’ corporate payments. For legal entities from unfriendly states, the ban on withdrawing funds from Russia stays in place unchanged. For Russian companies, the deciding factor in clearing a payment is the requirements of the foreign correspondent bank, and the Bank of Russia’s position has almost no bearing on the process.
| Parameter | Before December 2023 | After January 2026 |
|---|---|---|
| Counterparty screening by the bank | Once, at account opening | On every significant transaction |
| Grounds for refusing a payment | Direct match on the SDN list | A significant transaction benefiting Russia’s military-industrial base (EO 14114) |
| Screening level for banks in the EU circuit | Standard KYC | Enhanced Due Diligence, EDD (since 29.01.2026) |
| Processing time for a pharma API payment | Usually 2-3 business days | Can stretch to weeks if the bank requests more documents |
| Bank of Russia limits on individual transfers | $1 million a month | Lifted for friendly countries from 08.12.2025 |
On 20 June 2025 the FATF (Financial Action Task Force) published a report called «Complex Proliferation Financing and Sanctions Evasion Schemes.» The report’s main subject is North Korea and how it finances the development of weapons of mass destruction. The document separately names Russia and Iran as countries whose trade and financial chains use similar workaround schemes. The FATF sets out four typologies banks must respond to when screening counterparties: the use of intermediaries, concealment of beneficial-ownership information, use of virtual assets, and use of opaque maritime shipping routes.
Since 1 January 2026 the digital ruble has been available for federal-agency payments: public-sector wages, social benefits, capital construction of state facilities. Federal Law No. 303-FZ of 31 July 2025 established the use of a Federal Treasury digital-ruble account for these purposes. For pharma companies’ cross-border settlements the digital ruble is not yet used: the infrastructure is limited to the domestic public sector.
Action Plan for Regulatory and Finance Directors
A bank’s compliance department in a friendly country first checks a payment against standard risk indicators, and only then looks at how complete your company’s paperwork is. Knowing these indicators in advance cuts the number of requests for additional documents.
| Risk indicator | How it shows up in pharma supply | What lowers the risk of refusal |
|---|---|---|
| Goods with a dual-use code | Lab chromatographs, centrifuges, quality-control reagents | End-user certificate, description of use in the dossier |
| New counterparty with a sharp rise in turnover | Trader registered after 2022, turnover up several times in a year | Supply history, a direct contract with the API manufacturer |
| Transit payment with no obvious economic purpose | Payment routed through a third country with no warehousing or processing | Logistics documents confirming the delivery route |
| Mismatch between amount and stated purpose | Payment for «chemical products» with no breakdown by item | Invoice with an HS code and product specification |
Audit your payment flows by risk. Split foreign counterparties into three groups: suppliers of finished dosage forms and APIs (low delay risk), suppliers of lab and production equipment with HS codes on export-control lists (high risk), and new counterparties registered after February 2022 with a sharp rise in turnover (maximum risk for the bank’s compliance department).
Assemble the end-use documentation package in advance, before sending the payment order. The package includes: a contract describing the goods and their purpose, an end-user certificate for equipment, an HS code with a rationale for why it is not dual-use, and ownership-structure documents for both your company and the recipient.
Choose a banking partner with a transparent EDD process in a friendly jurisdiction. Ask the bank about its procedure for screening payments with a Russian element and typical EDD timelines. A bank that describes its process openly delays payments without explanation less often.
Diversify your payment channels. Do not route critical purchases, such as raw materials for continuous production, through a single correspondent bank. Ask your counterparty whether settlement is possible through SPFS (the Bank of Russia’s financial messaging system) using the ISO 20022 format, if both banks are connected to it.
Assign someone to monitor counterparty status. Check quarterly whether a supplier or its bank has landed on new OFAC, EU, or UK sanctions lists. A counterparty appearing on a list blocks a payment instantly, and setting up an alternative channel takes weeks.
Bank-level payment delays stopped being an exception for the pharma industry a while ago. Companies that prepare end-use documents before sending the payment order clear screening far faster than those that gather the same documents only after the bank asks for them.
Regulatory sources:
1. Federal Law No. 303-FZ of 31.07.2025, «On Amendments to the Budget Code of the Russian Federation»
2. Bank of Russia Information Notice of 05.12.2025, «The Bank of Russia Lifts Restrictions on Transfers Abroad for Citizens of Russia and Friendly Countries from 8 December»
3. Executive Order 14114, «Taking Additional Steps with Respect to the Russian Federation’s Harmful Activities,» of 22.12.2023 (USA)
4. European Commission Decision on listing Russia as a high-risk country for money laundering and terrorist financing, of 03.12.2025 (in force from 29.01.2026)
5. FATF, report «Complex Proliferation Financing and Sanctions Evasion Schemes,» of 20.06.2025