In order to help businesses identify attempts to circumvent sectoral sanctions against Russia and ensure compliance with export control regulations, the G7 countries and the European Union have jointly developed and published the guidelines “Preventing Russian Export Control and Sanctions Evasion: Updated Guidance for Industry”. These guidelines help to ensure the implementation of sanctions, mitigate reputation-related risks, and reduce liability risks.
The guidelines are important for participants in international trade that are subject to compliance with the sanctions imposed by the European Union or the G7 countries. The guidelines include the following key points:
The list of common high priority items includes goods and technologies that are important for the development, production, use of Russian military goods or that have been found in Russian weapons on the battlefield. The list identifies goods by their CN codes and is divided into several categories/levels, including microelectronics, electronic goods (e.g. related to wireless communications) and components, mechanical and other components, as well as production and quality testing equipment for electrical components, circuit boards and modules, high technology products, etc.
The guidelines identify dozens of signs that indicate a possible circumvention of sanctions. These “red flags” include, for example, the emergence of new or unrecognised business partners with a particular interest in the common high priority items on the list, inconsistencies or deficiencies in documentation and/or classification of goods, downgrading or splitting goods to avoid export bans or customs controls on luxury goods, etc. The guidelines provide guidance on how to recognise attempts to disguise the ultimate recipient of goods and what conduct or information provided by a customer, business partner should be regarded as suspicious.
Provides specific steps to take in cases where signs of sanctions evasion and risk indicators have been identified. Such steps include checking the sanctions lists against the persons involved in the transactions, conducting customer due diligence, including on the end-users of the goods, to ensure that the goods are not being diverted to sanctioned countries or sanctioned persons. An analysis of risk indicators and signs of sanctions evasion is also carried out to determine whether these signs can be sufficiently and convincingly explained. If such assurance cannot be obtained, the guidelines recommend refraining from the transaction and informing the relevant authorities.
In order to help businesses carry out more effective due diligence of their customers and business partners, the guidelines include a summary of links to sanctions lists of individual G7 countries and previously published explanations on sanctions implementation matters.
The publication highlights that sanctions have succeeded in limiting Russia’s access to goods important for the military industry, as well as reducing Russia’s ability to finance the war against Ukraine. At the same time, Russia is using deceptive tactics to acquire critical goods that it is banned from acquiring. It is therefore essential that companies and all involved parties, including exporters, financial institutions, and logistics service providers, recognise attempts to divert goods to Russia and put in place measures to mitigate the risks of sanctions circumvention.
The full English text of the guidelines is available here.
The Latvian translation of the guidelines is available here.
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