Trade Restrictions on Russia Tighten as U.S. Targets Sanction Evaders

The Russia-Ukraine conflict has resulted in a torrent of sanctions against Moscow. And with further restrictions likely, Russia has the distinction of being the most sanctioned country on the planet, with more sanctions (5,500 and counting) than Iran, Venezuela, and Cuba combined.

Now, the U.S. Treasury Department has set its sights on sanction evaders. Its Office of Foreign Assets Control (OFAC) has designated specific individuals and entities that it believes are involved in sanctions busting.

Businesses must be regularly screening new and existing partners to ensure they are not inadvertently transacting with an entity that is evading sanctions. Unfortunately, sanctions screening is a complex task due to intricate supply chains created by sanction evaders intentionally attempting to hide their sanctioned status.

Today, we’re going to discuss recent initiatives taken by the U.S. government to find sanction evaders and how businesses can make sure they are not doing business with a sanctioned party.

The United States, European Union, and G7 nations announced an information-sharing response to identify Russian sanction evaders.

One of the results of that is OFAC targeting a worldwide sanctions evading network led by the Russian oligarch Konstantin Malofeyev. As a result, the U.S. Department of Justice has charged Malofeyev with conspiracy to circumvent U.S. sanctions. 

The U.S. Treasury has identified specific entities involved in Malofeyev’s global network explicitly designed to evade sanctions. The network includes his family members, employees, and organizations created to obfuscate their connections to Malofeyev, according to OFAC.

Businesses should be aware of Malofeyev’s network. But to look at the bigger picture, his network serves as an example of what other maligned entities may be doing. Businesses must conduct denied party screening to avoid unknowingly partnering with sanction evaders.

The OFAC 50% rule states that any organization with 50% or more ownership held by a blocked person (or blocked entities) is also blocked. This rule further complicates the matter of identifying sanction evaders since a business must be aware of asset ownership of sanctioned entities. 

It’s clear that manual restricted party screening is inefficient and likely inaccurate, especially for larger organizations with countless trade chain partners of different types and classes, spread throughout the world. Software designed with sanctioned ownership screening in mind is the best way for businesses to guarantee that they are not working with any sanctioned organizations.

Sanctions screening is the process that companies must undergo to guarantee they are not unintentionally working with individuals or entities that have been targeted by international sanctions. It’s a complex process primarily due to the lack of a centralized government list that can be consulted. Additionally, nefarious parties have made great efforts to hide their ownership and reporting structures to continue transacting with legitimate companies.

Businesses across all industries need a reliable system in place for sanctions screening. Russia and its allies have diverse business interests – everything ranging from aerospace and automotive to agriculture and paper. Every industry should consider itself at risk of transacting with a sanction evader because the risks are ever present. Denied party screening software identifies sanctioned entities as well as known sanction evaders to prevent a company from unwittingly violating international sanctions.

Sanction screening software analyzes supply chains, global trade intelligence, and transportation management to determine if a partner is a denied or restricted party. This specialized software helps organizations in any industry stay compliant with active sanctions to avoid being implicated in sanction evading. 

Our sanction screening software is one of our powerful solutions that can help your organization ensure that you are not unwittingly working with sanctioned entities or individuals. We offer robust supply chain management and analysis with regularly updated sanctions that will continually analyze your organization to identify sanction evaders. Contact us today to discover how our solutions can keep you compliant with the latest sanctions.

To meet evolving compliance requirements, Descartes adds new entities to its screening lists as government and other official sources update theirs. Lists related to the Ukraine crisis have been updated within our application, and any further additions will similarly be made promptly to help keep our customers in compliance with sanctions and embargoes programs. Appropriate, timely updates are also made to classification and other compliance content.

Descartes is a provider of an industry-leading suite of denied party screening, 3rd party risk management solutions, as well as trade content for leading business systems, that can be integrated with minimal disruption, sometimes in under an hour.

Descartes Visual Compliance and Descartes MK solutions are flexible and modular, allowing organizations to pick the specific and exact functionality and content they need for their particular compliance needs and scale up later as and when necessary.