Financial intelligence agencies highlight efforts to export sensitive technology to Russia

Canada’s financial intelligence agency and European allies are uncovering efforts to export sensitive technology to Russia in violation of sanctions imposed against Moscow.

The warning comes in a new joint advisory from Canada’s Financial Transactions and Reports Analysis Centre, known as FINTRAC, and its counterparts in the Netherlands and Germany.

The agencies say they received reports “from various sources” about suspicions of such illegal activities following Russia’s full-scale invasion of Ukraine in 2022.

The agencies found that individuals and organizations attempting to evade sanctions and export control measures in their respective jurisdictions were using similar tactics.

The advisory is intended to help banks and others identify financial transactions and related activity that may be linked to the purchase of goods for illicit export, as well as the laundering of criminal proceeds from this activity.

Its specific purpose is to prevent the Russian Federation from accessing technology and goods necessary for the supply and replenishment of its military and defense industrial base.

The joint advisory was developed by the financial intelligence units of the three countries in consultation with the U.S. Treasury Department’s Financial Crimes Enforcement Network.

Banks given guidance on how to detect misuse

Among the items of concern are microelectronics and products related to wireless and satellite communications.

The advisory states, “When attempting to identify whether your customers engage in sanctions evasion or export control evasion with dual-use goods, it may be helpful to look at the products, the actors involved in the transaction, and their financial behavior ” ,

FINTRAC tries to trace money linked to illegal activities by electronically sifting through millions of reports about suspicious transactions from banks, insurance companies, money services businesses and others. It then discloses intelligence about suspected cases to the police and other law-enforcement agencies.

The advisory provides guidance to reporting entities on potential signals that customers may be attempting to circumvent sanctions or controls. These include:

• The company, which previously exported large volumes to Russia, is showing no decline in transaction activity after the invasion;
• The entities involved in the shipment of goods are not the same as the entities transferring funds to pay for the goods;
• Payments are handled by a third party not involved in the business transaction;
• Using a fictitious end user in another country, goods are shipped through Russia;
• Or the goods are sent to countries bordering Russia, where middlemen can re-export the goods to approved jurisdictions.