Trade Patterns, Products of Concern Identified for Russia Export Controls Evasion

The U.S. and others are intensifying efforts to prevent the evasion of their restrictions on exports to Russia.

In June 2023 the U.S. and its so-called “Five Eyes” partners – Australia, Canada, New Zealand, and the United Kingdom – announced plans to exchange information related to export control violations, including trends in illicit procurement methods. The Bureau of Industry and Security said this partnership would “significantly enhance the effectiveness of each country’s export control regimes, minimize gaps in enforcement, and foster joint investigations and coordinated enforcement actions.”

A Sept. 26 guidance follows up on that commitment by providing a list of 45 Harmonized System codes containing items Russia needs for its weapons systems, of which nine (including integrated circuits and radio frequency transceiver modules) are the highest priority. All five countries have either implemented sanctions and export controls with respect to these items or increased scrutiny of them to prevent potential sanctions and export control evasion. The guidance thus strongly encourages exporters to conduct additional due diligence when encountering one of these codes on commercial invoices or other trade documents.

The guidance also identifies three anomalous patterns associated with importers in countries outside of the Global Export Control Coalition (comprising 39 members that have implemented substantially similar controls on exports to Russia) that may raise concerns about the diversion of goods to Russia.

– the company never received exports before Feb. 24, 2022

– the company received exports that did not include any of the high-priority HS codes prior to Feb. 24, 2022

– the company received exports involving the high-priority HS codes prior to Feb. 24, 2022, but also saw a significant spike in exports thereafter

Further, the guidance sets forth (1) due diligence tips for screening new customers engaged in trade and located in non-GECC countries, and (2) additional red flag indicators that may be relevant to determining whether an activity may be connected to export control and/or sanctions evasion.

For more information on this guidance and how to ensure your country is complying with Russia export controls, please contact attorney Kristine Pirnia at (202) 730-4964 or via email.