The German economy minister and vice-chancellor Robert Habek has already announced that Germany is fed up with sanctions evasion by companies that are willing to resort to grey and black schemes and is determined to fight this. In export declarations, companies will be required to clearly state the end use of their goods “stating that they will not be further exported to Russia and the occupied territories”. These initiatives will be incorporated into German law at a pan-European level as well.
Obviously, the Germans have taken into account the scandalously unfortunate experience of Siemens and Grundfos with the aggressor, including in the field of ecology.The Association detailed in a series of investigations facts about how the aggressor uses “bad deals” and loopholes to attract Western technology to occupied Crimea.
The fact is that, as Habek stated, a significant amount of the sanctioned goods are imported from Germany and the European Union into Russia via third countries, not to mention that products may find their way into occupied territories, including Crimea. Habek is confident that the time has come to resort to penalties, up to and including criminal liability for such things. The decisions taken by the Germans were mentioned by our Association.
The new rules will apply to “all sanctioned goods of relevance to the Russian military machine”, the Economics Ministry said in a statement. Whoever provides false information in the end-use statement will face criminal prosecution.
The German Economy Ministry refuses to consider circumventing sanctions a “small misdemeanour” and the companies involved “betray the interests of the Ukrainian people who are fighting for their freedom”. Such persistent violators will be blacklisted “to make it impossible to continue trade with such companies” and “interrupt illegal supplies to the aggressor”.
The US has also been notified of new restrictions against the aggressor. The relevant authorities in the US Departments of Commerce, Justice and Treasury point to the risks associated with circumventing the restrictions through countries such as China, Turkey, Belarus, Armenia and Uzbekistan.
As a result, U.S. manufacturers, distributors, resellers, and shippers will be required to screen transactions with companies from these countries for violations of sanctions restrictions and illegal shipments, including to occupied Crimea.
All financial institutions and companies that trade in US products or goods have been made aware of the responsibility to circumvent export controls. From now on, they must be vigilant in any transactions. To detect sanctions evasion, the US Department of the Treasury has even offered whistleblowers a reward in the form of a 10-30% fine that the authorities charge for sanctions violations. The US Financial Crimes Enforcement Network (FinCEN) receives hundreds of whistleblower reports.
The main signals for US campaigns to follow are:
- The use of corporate structures (i.e. legal entities such as shell companies and legal entities) to conceal, title, (source of funds or) countries involved, especially sanctioned jurisdictions.
- Customer reluctance to share product end-use information, including reluctance to complete an end-user form.
- The use of shell companies for international wire transfers, often involving financial institutions in jurisdictions other than the company’s registration.
- IP addresses that do not match the location data provided by the customer.
- Last minute changes to delivery instructions that conflict with customer history or business practices.
- Payment coming from a third party country or company not specified in the End User Statement or other applicable end user form.
- Using personal email accounts instead of company email addresses.
- Avoiding the officially known form BIS-711, End-user and Buyer Statement.
- Managing complex and/or international businesses using residential addresses or addresses shared by several closed legal entities.
- Changes to standard engagement letters which conceal the end customer.
- Transactions involving changes in shipments or payments that were previously scheduled for Russia or Belarus.
- Transactions involving entities with little or no presence on the Internet or directing purchases through certain transhipment points that are commonly used to illegally divert illicit goods to Russia or Belarus (such locations may include China (including Hong Kong and Macao) and jurisdictions close to Russia, including Armenia, Turkey and Uzbekistan).
For their part, the political leadership of the terrorist country announced a “witch-hunt” and absurdly intended to notify the WTO (World Trade Organisation) of the allegedly discriminatory measures, neglecting to mention that Russia was excluded from the lav structure.
At the same time, analysts of major Russian companies have recognised the damage of the sanctions and are preparing for sanctions pressure by expanding secondary claims to the russian satellites and countries that support the aggressor’s economy. The weak link, according to analysts, is the Mir system, as it uses foreign software, and most foreign banks have refused to work with Russian Mir cards due to fears of secondary sanctions, including the aggressor’s claimed presence of Russian banks in the occupied peninsula funding the war.
