REPO Global Advisory on Russian Sanctions Evasion

In February 2022, following Russia’s invasion of Ukraine, a multilateral initiative named the Russian Elites, Proxies, and Oligarchs (REPO) Task Force was established. Comprising countries such as Australia, Canada, France, Germany, Italy, Japan, the United Kingdom, the United States, and the European Commission, this collaborative effort aimed to isolate and exert significant pressure on sanctioned Russian individuals and entities. Each member jurisdiction’s Finance Ministry and Justice or Home Ministry actively participated in tracking Russian sanctioned assets and restricting access to the international financial system. This collective effort resulted in freezing tens of billions of dollars and seizing high-value assets.
However, some sanctioned Russian elites managed to evade sanctions, accessing funds or generating revenue contrary to multilateral sanctions. To address this, the REPO Task Force identified several typologies of sanctions evasion tactics. These included using family members and close associates to maintain control and access, utilising real estate to hold and benefit from wealth, employing complex ownership structures to avoid detection, engaging enablers to facilitate evasion, and utilising third-party jurisdictions and false trade information for sensitive goods shipments to Russia.
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To enhance collaboration with the private sector, the REPO Task Force has now issued recommendations to mitigate the risk of sanctions evasion. Private sector partners were urged to review relevant advisories and publications issued by the task force members.
– In order to enhance compliance with national rules incorporating FATF recommendations, regulated entities, whether financial institutions or designated non-financial businesses and professions, should implement appropriate risk mitigation measures. These measures should focus on preventing illicit financial activity, such as the use of shell companies or nominees.
– Additionally, regulated entities must ensure that their compliance programs align with relevant AML/CFT laws and regulations. Regular reviews of these programs are essential to maintain adherence to reporting requirements and identify and report illicit activities.
– Regulated entities should consider participating in existing public-private partnerships with competent authorities to gain insight and inform their efforts. Such engagement can promote cooperation and enhance awareness of risks, trends, and typologies identified by the private sector.
– Leveraging information sharing protocols is vital for regulated entities to identify suspicious activities related to Russian sanctions evasion. Access to customer information, transaction details, and trade documentation should be maximised to enhance risk mitigation.
– Updating risk assessments is critical, considering the evolving landscape of illicit finance and the impact of Russia’s invasion of Ukraine on global financial and trade systems. – Regulated entities must remain vigilant and adapt their risk assessments accordingly.
– The REPO notes that sanctions apply to all entities, not just those regulated for AML/CFT. Economic operators and non-regulated entities should invest in sanctions compliance measures and seek educational opportunities to understand sanctions and avoid unintentional facilitation of Russian sanctions evasion. By doing so, they can mitigate sanctions risk and ensure compliance with jurisdiction-specific sanctions.