The US has launched a renewed crackdown on countries and individuals helping the Kremlin evade western sanctions amid growing fears Russia is fuelling the war in Ukraine by funnelling imports through countries such as the United Arab Emirates and Turkey.
The push by the US Treasury, commerce and justice departments, details of which were first obtained by the Financial Times, comes as western allies increasingly believe Turkey and the UAE, as well as countries in central Asia and the Caucasus, have emerged as the weak links in their efforts to isolate Russia both economically and militarily.
“Those who attempt to prop up Putin’s war machine by evading our export controls and sanctions will be held accountable,” Matthew Axelrod, assistant secretary of commerce for export enforcement, said in a statement.
Elizabeth Rosenberg, the assistant Treasury secretary for terrorist financing and financial crimes, said on Thursday that the UAE was a “country of focus” for the US.
Rosenberg said UAE companies exported more than $18mn worth of goods to “US-designated Russian entities” between July and November of 2022. She added that $5mn of that was “US-origin, US-export controlled goods to Russia”, including “semiconductor devices, some of which can be used on the battlefield”.
“These types of figures are the basis for our engagement with the private sector, so that we can clarify the consequences of violating sanctions and export controls, discuss high-risk activity, and act when necessary,” she said.
As part of their effort, the three US agencies issued a “compliance note” on the “use of third-party intermediaries or transshipment points to evade Russian- and Belarusian-related sanctions and export controls”.
This includes a list of “red flags” businesses should be looking out for in terms of potential sanctions evasion, singling out specific states including China, Armenia, Turkey and Uzbekistan that western allies say are commonly used as “transshipment points” in order to “illegally redirect restricted items to Russia or Belarus”.
“The UAE recognises its critical role in safeguarding the integrity of the global financial system,” an official from the Gulf state said. “The UAE takes this responsibility extremely seriously, and has clear and robust processes in place to deal with sanctioned entities.”
In her remarks, Rosenberg cited the steps taken by the west to impose financial and economic penalties on Russia for its full-scale invasion of Ukraine, but said Moscow would keep looking for “ways to work around our measures”.
“The coming year will be about ensuring that our sanctions architecture is fully enforced and effective — in particular, by figuring out and cracking down on the ways Russia evades sanctions.”
Rosenberg added that the US and its allies were engaged in a “broad campaign” to crack down on such behaviour. “We are specifically concerned about increases in trade with Russia in the kind of goods that can be used on the battlefield and those who are aiding designated Russian entities. We are investigating this type of assistance at the individual, firm and sector level.”
In their compliance note to businesses, the US agencies said other red flags for sanctions evasion included the use of shell companies for international wire transfers, last-minute changes to shipping instructions, the use of personal rather than company email addresses, and transactions with entities with little or no online presence.
The note also cited previous examples in which the justice department brought criminal charges for the evasion of sanctions and export controls.
