The US warned companies to be on guard for transactions that could help Russia evade western sanctions, especially if they’re linked to China, Turkey and a handful of other nations, as officials look to step up sanctions enforcement a year into the invasion of Ukraine.
(Bloomberg) — The US warned companies to be on guard for transactions that could help Russia evade western sanctions, especially if they’re linked to China, Turkey and a handful of other nations, as officials look to step up sanctions enforcement a year into the invasion of Ukraine.
An advisory from the departments of Commerce, Justice and Treasury said companies should be on the lookout for “transshipment points” where goods are legally purchased and then sent on to Russia or Belarus. Those locations include China, Hong Kong, Macau and Russia’s close neighbors Armenia, Turkey and Uzbekistan, according to the notice.
The advisory amounted to a warning that businesses could be held responsible if parties they transact with turn out to be front companies assisting President Vladimir Putin’s war effort. In the past, the US has imposed steep fines on sanctions violators even in cases when they argued they hadn’t meant to break the law.
“Businesses of all stripes should act responsibly by implementing rigorous compliance controls, or they or their business partners risk being the targets of regulatory action, administrative enforcement action or criminal investigation,” the departments said.
The note echoed remarks from Secretary of State Antony Blinken in Uzbekistan earlier this week, when he said the US was on the lookout for evasion from central Asian states. Officials have said they fear appliances such as washing machines and refrigerators are sent to countries like Uzbekistan and stripped of semiconductors that then find their way to Russia.
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In the second year of Russia’s invasion of Ukraine, the US has placed a new focus on clamping down on sanctions evasion. Treasury officials have traveled to countries such as Turkey and the United Arab Emirates to underscore the message that providing material support to Russia’s war effort will land the offending parties on the wrong side of US sanctions policy.
The message is particularly complicated when it comes to China, which has increased its shipments of semiconductors and other forms of technology to Russia but is one of the US’s largest trading partners and its chief geopolitical rival.
The joint statement warns of a series of red flags that could indicate a company or country is helping to supply Russia by hiding the true nature of the transactions. These include the use of shell companies, lack of an online presence, the use of personal email addresses or home addresses and unexplained changes to standard documents.
To avoid running afoul of US sanctions, companies should screen current and new customers and other parties in their supply chains and cross-check them against individuals and entities on US blacklists. They should also keep up with regular guidance from the Commerce and Treasury Departments and strengthen their compliance programs.
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