UK Issues Guidance, Red Flags on Russian Sanctions Evasion
The U.K. Department for Business and Trade released new guidance covering Russia-related sanctions circumvention. The guidance addresses ways companies can conduct sanctions due diligence, how companies try to "covertly" acquire goods through the procurement cycle and several red flags and "risk indicators."
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Although trade between the U.K. and Russia "has fallen significantly since sanctions were introduced," Russia is trying to "procure restricted goods via other routes," the U.K. said, adding that companies may face risks "around displacement of trade and diversion of goods to Russia." The country said traders need to consider those risks as part of their due diligence procedures.
Some of the customer risk indicators highlighted by the U.K. include parties involved in buying or selling "high-risk goods," a customer with a connection to a "country of concern" and a customer that had previously done business with now-sanctioned parties. The U.K. also said industry should watch for customers selling goods "with a disproportionate delivery cost without a justified reason;" "complicated structures to conceal involvement," such as layered letters of credit, front companies intermediaries and brokers; a telephone number "matching or suspiciously similar" to those on public sanctions lists; customers being "vague about details," including about the end user and end use; and customers that provide "incomplete information and is resistant to providing additional information when sought."
"Strong due diligence on counterparties and internal governance in relation to sanctions is essential," the agency said, stressing that companies should continuously conduct diligence "even on established counterparties" to "ensure that the risk has not changed."