Publication of Tri-Seal Compliance Note: Cracking Down on Third-Party Intermediaries Used to Evade Russia-Related Sanctions and Export Controls

The Office of Foreign Assets Control, OFAC, has published a press release to inform of the publication of a so-called Tri-Seal Compliance Note which was drawn up jointly by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS), the U.S. Department of Justice (DOJ), and OFAC itself to alert of ongoing attempts of entities, bodies, and individuals on the circumvention of export controls and sanctions in connection with Russia and its aggression towards Ukraine. The compliance note is primarily addressed at financial market participants, including intermediaries, banks, and payment service providers, to help them detect and prevent any such fraudulent activity.
Specifically, the regulators describe red flags that market players should look out for, including, but not restricted to the following – as quoted:
– Use of corporate vehicles (i.e., legal entities, such as shell companies, and legal arrangements) to obscure (i) ownership, (ii) source of funds, or (iii) countries involved, particularly sanctioned jurisdictions;
– Use of shell companies to conduct international wire transfers, often involving financial institutions in jurisdictions distinct from company registration;
– Payment coming from a third-party country or business not listed on the End-User Statement or other applicable end-user form;
– Use of personal email accounts instead of company email addresses;
– Transactions involving entities with little or no web presence.
Also, the regulators describe tactics used by perpetrators to evade U.S. sanctions, e.g. by quickly transferring received funds in U.S. accounts to other accounts or by claiming that the products are used by entities or intermediaries not subject to trade and financial restrictions. A list of currently observed tactics is provided in the document.
Finally, the regulators urge market players and trade firms alike to self-disclose any possible violations of U.S. sanction and trade restrictions and describe how to go about such self-disclosure.