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New US Sanctions, Entity Listings Target Russia Sanctions-Evasion Networks

October 31, 2024 by Ian Cohen|Top News

The U.S. this week unveiled new trade and financial restrictions against people and companies across more than 17 countries for helping Russia evade sanctions or for supporting the country’s military, adding nearly 400 to the Treasury Department’s sanctions list and more than 40 to the Commerce Department’s Entity List. Another move by Commerce will tighten existing controls on nearly 50 entities that it said are procuring U.S.-branded microelectronics for Russia.

The designations target a range of third-country companies, along with entities in Russia, that the State Department said are helping Russia’s “backfilling efforts,” including its purchases of controlled technology and equipment it needs to sustain its war against Ukraine. The sanctions and Entity Listings highlight producers, exporters, importers, logistics firms and others that are moving items essential for Russia’s military-industrial base, including microelectronics, computer numerical control items (CNC) and more of the most sensitive goods on the U.S. government’s Common High Priority List.

The entities are located in India, Malaysia, Russia, Singapore, Turkey, Estonia, Finland, the United Arab Emirates and elsewhere, though Secretary of State Antony Blinken specifically highlighted the agency’s sanctions against several Chinese firms that he said are “exporting dual-use goods that fill critical gaps in Russia’s military-industrial base.”

“We will continue to use all available tools to disrupt networks of support for Russia’s military-industrial base wherever they may operate,” Blinken said.

Additions and Updates to Entity List

The new Entity Listings, announced in an Oct. 30 final rule by the Bureau of Industry and Security and effective Nov. 1, target 40 entities and four addresses that it said are being used to ship sensitive items to Russia or for other activities that support Russia’s military. They will be subject to license requirements for all items subject to the Export Administration Regulations, and licenses will be reviewed either under a presumption of denial or a policy of denial with certain exceptions for food and medicine designated as EAR99, which will be reviewed on a case-by-case basis.

One company in India, Agrim Aviation Private Limited, “likely” sent controlled U.S. items illegally to a party in Russia’s aerospace sector that is subject to a BIS temporary denial order, the agency said, which blocks them from participating in transactions subject to the EAR. Agrim Aviation also has “engaged in dilatory, evasive, or misleading behavior” about its imports of U.S. items, BIS said, and has “effectively prevented” the agency from carrying out end-use checks.

Others that will be added to the list include Russian research and science institutes working to develop or procure “materials” to support Russia’s chemical and biological weapons program. BIS designated them as Russian or Belarusian military end users, which will make them subject to more strict license requirements under the Russia/Belarus-Military End User and Procurement Foreign Direct Product (FDP) rule.

Other entities in Malaysia and Turkey sent sensitive U.S.-origin goods to Russia’s defense industrial base, while newly added companies in India, China and Singapore sent U.S.-branded parts, aircraft parts or other items to Russia. In certain cases, they sent items to sanctioned entities, BIS said, including firms “known to procure foreign components for Russian drone production.” BIS also designated them as Russia/Belarus military end users.

Other companies will be added for illegally sending goods to Chinese firms that are already subject to strict export controls. The rule will add China-based Beijing Aerospace Hill Test Technology Co., Ltd.; Suzhou Tiangong Mechanics Testing Technology Co., Ltd.; and Suzhou Tiangong Testing Technology Co., Ltd. for acquiring U.S.-origin items related to “vibration tables,” which BIS said have “explicit military applications,” and sending those items to Chinese entities on the Entity List. BIS also said Beijing Aerospace Hill Test Technology has “been involved in the shipment” of controlled items to Russia since the country’s invasion of Ukraine in 2022.

The rule also adds four addresses in Hong Kong that BIS said are “associated with significant transshipment of sensitive goods to Russia” and linked to a “significant number of entities whose activities risk violating the EAR.” Those risks include associations with parties on Treasury’s Specially Designated Nationals List and entities on the Entity List, BIS said.

Matthew Axelrod, the lead BIS export enforcement official, said the addresses are “corporate secretary addresses.” He also said the Entity List additions “send a crystal-clear message” about BIS enforcement efforts.

“If you’re supporting Russia’s aerospace, chem-bio warfare, or drone programs, or you enable the activities of Russian shell companies,” Axelrod said, “we will do everything possible to ensure you end up on our Entity List.”

Along with adding new entities, BIS will also designate nearly 50 entities already on the list as military end users, subjecting them to the Russia/Belarus-Military End User and Procurement FDP rule. The companies, located in China, Estonia, Finland, India, Turkey, the UAE and the U.K., “pose a significant risk of involvement in the supply or diversion of items subject to the EAR to procurement networks for Russia’s defense industry or intelligence services,” BIS said.

All exports that will soon require a license as a result of this rule but were aboard a carrier to a port as of Nov. 1 may proceed to their destinations under the previous eligibility as long as the items are exported before Dec. 2, BIS said. Any items not exported before midnight Dec. 2 will require a license.

New Treasury and State Sanctions

The hundreds of people and entities added to Treasury’s SDN List are involved in “sprawling sanctions evasion networks” around the globe or are domestic Russian importers and producers of key inputs and weapons for the country’s military, Treasury said.

The agency said it sanctioned more than 120 parties for shipping Common High Priority List items to Russia, while other designations target “financial facilitators,” including trust and corporate formation service providers that aid sanctions evaders. More than 150 other sanctions target Russia-based defense, technology, manufacturing and aerospace firms that procure or produce finished military products or machinery.

The measures target Russian procurement networks in Turkey, China, India and other firms in Thailand, Benin, Montenegro and elsewhere. Treasury specifically highlighted a mainland China and Hong Kong-based network running Sinno Electronics Co., Limited and Sinno Group Limited, which are “longtime” suppliers of microelectronics to Russia. The agency said Sinno Group has “claimed” to have shipped electronic equipment to Russia since 2010, and it sponsored Russia’s “largest electronics exhibition” in April.

The agency sanctioned several Hong Kong companies with ties to Sinno Electronics, including Allparts Trading Limited, Align Trading Limited and Chips Resources Limited, a company that Treasury said has made thousands of shipments of microelectronics to Russia.

BIS named Chips Resources Limited in the list of nearly 700 risky foreign suppliers that it circulated to U.S. manufacturers, distributors and exporters earlier this year. The agency warned U.S. companies that the suppliers on the list -- which was obtained in June by Export Compliance Daily (see 2406060041 and 2409110046) -- needed to be approached with extra due diligence because they were buying sensitive dual-use parts later found in Russian weapons.

Treasury notably sanctioned multiple trust and service providers that are helping Russia’s sanctions evasion efforts, including Swiss nationals Andres Baumgartner and Fabio Libero Delco, two “major handlers” of Russian assets that have provided services to sanctioned Russians. Also designated was Thailand-based Intracorp Company Limited, which has for “years” helped Russians create companies in Thailand, while Bermuda- and Switzerland-based Sister Trust is a trust controlled by sanctioned Russian oligarch Alisher Burhanovich Usmanov.

The State Department sanctioned more than 100 entities in China, India, Malaysia, Thailand, Turkey and the UAE for sending controlled items to Russia. One entity, UAE-based Abu Ragueb General Trading LLC, has shipped more than $510,000 worth of U.S.-origin aviation parts and Common High Priority List Tier 3 items to S 7 Engineering -- a sanctioned arm of Siberian Airlines (see 2406170039) -- from January to March alone.

The agency also designated Chinese companies that have shipped tens of millions of dollars worth of controlled items to Russia within the last year. Yiwu Vortex Import and Export Co Limited has been tied to more than $32 million worth of shipments of electronic components and other sensitive items to Russian companies from August 2023 to at least March 2024, while Etop Electronics HK Co Limited has been involved with more than $24 million worth of similar shipments from January 2023 to March 2024.

Along with the new sanctions, Treasury also updated or issued new Russia-related general licenses:

Treasury also issued new and updated FAQs to provide guidance on the new sanctions or revised licenses. FAQ 976 provides guidance on certain energy-related transactions processed by financial institutions, FAQ 1040 covers certain transactions related to telecommunications and certain internet communications, and FAQ 1198 covers whether U.S. people and companies can carry out transactions involving newly sanctioned company Shreya Life Sciences Private Limited if those transactions involve pharmaceuticals and other humanitarian-related goods.