September 12, 2023

FinCEN publishes report of BSA data on suspected evasion of Russian export controls

An examination of Bank Secrecy Act data by the US Department of the Treasury’s Financial Crimes Enforcement Network has brought to light important information about Russian procurement activities.  The Financial Trend Analysis published this month by FinCEN, Trends in Bank Secrecy Act Data:  Suspected Evasion of Russian Export Controls, draws on data received largely in response to two Alerts issued jointly by FinCEN and the US Department of Commerce’s Bureau of Industry and Security following Russia’s invasion of Ukraine in February 2022.  The data covers the period between June 28, 2022 and July 12, 2023.

FinCEN’s analysis reveals several avenues of export control evasion involving goods received by Russian companies operating in sectors potentially supporting military efforts in Ukraine:

  • US-origin goods supplied directly to Russian end users – for example, a US-based manufacturer of fluid transfer system components that received wires from Russian entities between December 2021 and October 2022, followed by wires regarding similar transactions from a Central Asia-based company after October 2022.
  • US-origin goods supplied to companies in intermediary countries, potentially on behalf of Russian end-users – for example, a network of United Arab Emirates companies that moved electronics and computer components from China, South Korea and the United States to Russia through third countries, and Central Asian subsidiaries of Russian parent companies that procured electronics and aircraft parts from suppliers that had transacted with the Russian parent entities prior to the invasion of Ukraine.
  • Trade in potentially sensitive goods by companies in China, Hong Kong, Turkey and the United Arab Emirates – for example, a global financial network linked to the possible trade in dual-use goods on behalf of military end-users in Russia, and China and Hong Kong-based entities possibly providing support to Russian military entities and defense industries.

 

Concluding the report, FinCEN urges financial institutions to exercise vigilance, and to pay close attention to the red flags highlighted in the Alerts issued in June 2022 and May 2023, and the general anti-money laundering and countering the financing of terrorism priorities detailed in FinCEN’s June 2021 report.

FinCEN Financial Trend Analysis