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Volume XII, Number 275

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FinCEN and BIS Warn Financial Institutions About Potential Evasion of Russian and Belarusian Export Controls

On June 28, 2022, the Financial Crimes Enforcement Network (FinCEN) and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) issued a rare Joint Alert focused on the intersection of anti-money laundering and export control compliance. Directed at financial institutions covered by the Bank Secrecy Act (BSA), the Joint Alert aims to help these entities identify reportable instances of potential export control evasion in connection with the Russian invasion of Ukraine.

In response to Russia’s invasion of Ukraine, BIS has implemented a series of controls targeting Russia’s defense, aerospace, and maritime sectors, among others. Notably, the controls place significant restrictions on U.S. exports, reexports, and even in-country transfers to Russia, as well as products destined for Russia and manufactured abroad with certain U.S. technology and/or de minimis U.S. content.

To help financial institutions identify suspicious transactions related to potential evasion of these controls, the Joint Alert outlines commodities of particular concern that may be used to further the military and defense capabilities of Russia and Belarus and that require a BIS license prior to export or reexport to Russia or Belarus. These commodities include aircraft equipment, antennas, GPS systems, and cameras, among others.

The Joint Alert also outlines certain transactional and behavioral red flags for export control evasion, including:

  • Transactions involving a change in shipments or payments that were previously scheduled to go to Russia or Belarus, but that are now going to a different country;

  • Transactions involving payments from entities in third-party countries who are not otherwise involved with the transactions, where the countries are potential transshipment points for exports to Russia and Belarus;

  • The use of business checking or foreign exchange accounts by U.S.-based merchants involved in the import and export of electronic equipment, where the transactions are conducted with third-country-based electronics and aerospace firms with offices in Russia or Belarus; and

  • Transactions involving entities whose website or business registration states that the entities work on “special purpose projects.”

The Joint Alert further notes that the procurement of EAR99 items—a category generally referring to low-tech consumer goods that do not require a license for export, re-export, or transfer to most destinations—can be a common tactic for evading BIS scrutiny.

Because many financial institutions are involved in providing financing or processing payments for export-related activity, they may be uniquely equipped to help identify suspicious activity. For example, the Joint Alert notes that firms that provide financing to exporters may have access to customers’ end-use certificates, export documents, or other more extensive documentation associated with letters of credit-based trade financing.

Financial institutions, especially those directly involved in trade finance, may wish to review their protocols for identifying and reporting suspicious activity in light of this Joint Alert.

Special thanks to Summer Associate Miranda R. Carnes for her valuable contributions to this GT Alert. Not a licensed attorney.

©2022 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume XII, Number 200
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About this Author

Kara Bombach, Greenberg Traurig, Washington DC, International Trade and White Collar Defense Attorney
Shareholder

Kara Bombach assists companies to lawfully export goods, technology and services around the globe. She places significant emphasis on helping clients achieve practical, workable solutions to complex regulatory situations arising under anti-corruption and anti-bribery measures (U.S. Foreign Corrupt Practices Act (FCPA) and OECD Convention), export control laws (EAR and ITAR), anti-boycott laws, and special sanctions (embargoes) maintained by the U.S. government (OFAC and other agencies) against various countries (including Iran, Cuba and Sudan), entities and individuals....

202-533-2334
Kyle R. Freeny Shareholder Anti-money laundering issues Bank Secrecy Act Anti-corruption, Foreign Corrupt Practices Act, Asset forfeiture, Foreign Agents Registration Act FARA, Government investigations,Compliance counseling
Shareholder

Kyle R. Freeny, a skilled trial attorney and former federal prosecutor for the Special Counsel’s Office and the Department of Justice (DOJ), Criminal Division’s Money Laundering and Asset Recovery Section (MLARS), focuses her practice on white collar criminal defense, government and internal investigations, and anti-money laundering (AML) and international corruption matters.

Kyle was one of 19 prosecutors selected by Robert S. Mueller III to conduct the high-profile investigation into alleged Russian election interference, coordination between Russian officials and the Trump...

202-331-3118
Marina Olman Pal, Greenberg Trauig Law Firm, Miami, Corporate and Finance Law Attorney
Practice Group Attorney

Marina Olman-Pal advises foreign and U.S. financial institutions on licensing, regulatory and compliance matters. She represents clients before U.S. regulators such as the Federal Reserve, OCC, FDIC, FinCEN, OFAC, Florida Office of Financial Regulation and other supervisory authorities. Marina counsels foreign and U.S. financial institutions on a broad range of issues including the Bank Secrecy Act (BSA), anti-money laundering compliance and Office of Foreign Assets Control (OFAC) sanction programs.

Concentrations

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305-579-0779
Sonali Dohale, Greenberg Traurig Law Firm, Washington DC, Environmental and International Trade Law Attorney
Associate

Sonali Dohale focuses her practice on compliance counseling, environmental due diligence and environmental litigation under state and federal statutes. Sonali’s experience at government regulatory agencies and her background in civil and environmental engineering help give her insight into both the legal and technical challenges faced by her clients.

In addition, Sonali assists clients engaged in international trade with a variety of federal regulatory issues, including matters related to the International Traffic in Arms Regulations (ITAR), the...

202-533-2381
Cyril Brennan, Greenberg Traurig Law Firm, Washington DC, International Trade Law Attorney
Shareholder

Cyril (Cy) Brennan focuses his practice on international trade regulation and compliance, with an emphasis on U.S. export controls and economic sanctions. Cy handles matters regarding the International Traffic in Arms Regulations (ITAR), the Export Administration Regulations (EAR), U.S. sanctions programs administered by the Treasury Department’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s anti-boycott regulations. In addition, he represents clients before the Committee on Foreign Investment in the United States (CFIUS), and advises clients...

202-533-2342
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