The electrocatalytic CO2 reduction reaction (CO2RR) is one of the key technologies of the clean energy economy. Molecular-level understanding of the CO2RR process is instrumental for the better design of electrodes operable at low overpotentials with high current density. The catalytic mechanism underlying the turnover and selectivity of the CO2RR is modulated by the nature of the electrocatalyst, as well as the electrolyte liquid, and its ionic components that form the electrical double layer (EDL). Herein we demonstrate the critical non-innocent role of the EDL for the activation and conversion of CO2 at a high cathodic bias for electrocatalytic conversion over a silver surface as a representative low-cost model cathode. By using a multiscale modeling approach we demonstrate that under such conditions a dense EDL is formed, which hinders the diffusion of CO2 towards the Ag111 electrocatalyst surface. By combining DFT calculations and ab initio molecular dynamics simulations we identify favorable pathways for CO2 reduction directly over the EDL without the need for adsorption to the catalyst surface. The dense EDL promotes homogeneous phase reduction of CO2via electron transfer from the surface to the electrolyte. Such an outer-sphere mechanism favors the formation of formate as the CO2RR product. The formate can undergo dehydration to CO via a transition state stabilized by solvated alkali cations in the EDL.