Financial intelligence agencies flag attempts to skirt sanctions against Russia

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This article was published 20/02/2024 (576 days ago), so information in it may no longer be current.

OTTAWA – Canada’s financial intelligence agency and European allies are highlighting attempts to export sensitive technology to Russia in violation of sanctions imposed against Moscow.

The warning comes in a new joint advisory from the Financial Transactions and Reports Analysis Centre of Canada, known as Fintrac, and its counterparts in the Netherlands and Germany.

The agencies say they received reports “from a variety of sources” about suspicions of such illicit activities after Russia’s full-scale invasion of Ukraine in 2022.

The agencies discovered that the individuals and organizations trying to evade sanctions and export control measures in their respective jurisdictions were using similar tactics.

The advisory is intended to help banks and others recognize financial transactions and related activity that could be linked to the purchase of goods for illegal export as well as the laundering of criminal proceeds from this activity.

The specific aim is to prevent the Russian Federation from accessing needed technology and goods to supply and replenish its military and defence industrial base.

The joint advisory was developed by the three countries’ financial intelligence units in consultation with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network.

Among the items of concern are microelectronics and products related to wireless and satellite communication.

“When attempting to identify whether your customers engage in sanctions evasion or export control evasion with dual-use goods, it can be helpful to look at the products, at the actors involved in the transactions, and at their financial behaviour,” the advisory says.

Fintrac tries to pinpoint money linked to illicit activities by electronically sifting millions of reports about suspicious transactions from banks, insurance companies, money services businesses and others. It then discloses intelligence to police and other law-enforcement agencies about the suspected cases.

The advisory provides guidance to reporting entities on possible signs that clients are trying to skirt sanctions or controls. These include:

— a company with previously large export volumes to Russia showing no decline in transaction activity post-invasion;

— entities involved in the shipment of goods are not the same as those transferring funds to pay for the goods;

— payment is handled by a third party not involved in the trade transaction;

— the goods are shipped through Russia, using a fictitious end user in another country;

— or the goods are shipped to countries bordering Russia, where middlemen can re-export the items to the sanctioned jurisdiction.

This report by The Canadian Press was first published Feb. 20, 2024.