Supplemental Alert: FinCEN and the U.S. Department of Commerce’s Bureau of Industry and Security Urge Continued Vigilance for Potential Russian Export Control Evasion Attempts

The Financial Crimes Enforcement Network (FinCEN) and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) have issued a joint alert to provide guidance to financial institutions regarding possible trade restriction evasion attempts by entities of the Russian Federation and Belarus following the occupation of Crimea and the invasion of the Ukraine by Russian military and the subsequent imposition of sanction measures. The alert is supplemental to the one issued in 2022 (FIN-2022-Alert003), as it incorporates additional knowledge gained since 2022, particularly as far as sanction evasion tactics are concerned.
#### The new alert now
– describes some common sanction evasion typologies (e.g. the establishment of shell or front companies in third countries which order military or dual use goods from the U.S. and make payments via their non-Russian bank accounts);
– provides a summary of current export restrictions and sets out a list of goods whose possible export is of particular concern as the items can be used for military purposes (please see the table at the end of this Event);
– provides advice to financial institutions with respect to the noted items and corresponding due diligence practices as regards the monitoring of potential payments for such goods; and
– lists a number of red flags that may indicate an attempt to evade U.S. sanctions and other export restrictions, including the following, among others:
– the account holder refuses to provide additional information on any transactions;
– the party to a transaction does not engage in business the payment is designated for;
– account holders who never engaged in payments for any of the below noted items before February 24, 2022 are now receiving or making payments on such; or
– account holders‘ addresses are very similar to those of sanctioned parties.
Finally, the alert provides guidance to institutions as to their reporting obligations in this context and the applicable laws and regulations that mandate enhanced due diligence with respect to certain customer accounts.
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List of Goods