Citadele Bank

Advice for Businesses: How to Recognise Sanctions Evasion Attempts

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Over the past few weeks, in reaction to Russia’s illegal invasion of Ukraine, both the EU and USA as well as other countries have introduced significant and broad sanctions against Russia and Belarus, leading many businesses from these sanctioned countries to explore ways to evade sanctions.  

Bearing in mind that sanctioned individuals often purposefully attempt to hide their links with certain transactions — including the use of long chains of intermediaries, falsified documents or incomplete information — Citadele’s experts have provided some practical tips for business owners to help them recognise attempted evasion of sanctions.

The bank’s sanctions experts have already noticed attempts to evade sanctions. The United States Financial Crimes Enforcement Network (FinCEN) also published a warning in March 2022 on the risks they have perceived.

“As a result of the sanctions on the products and services of several industries, the Russian and Belarussian export markets have shrunk dramatically. This is both as a direct result of the restrictions, and because many businesses in other countries no longer wish to do business in these countries for reputational reasons. We invite businesses to be vigilant and ensure that individuals, businesses and countries under sanction do not place you at risk of breach or evasion of sanctions, which may result in legal action or frozen assets,” explains Saiva Krastiņa, Citadele’s leading sanctions expert.

We suggest that business owners look out for the following characteristics, which may point to sanction evasion attempts, although the list is not exhaustive. The following points apply to both goods and services.

  • A new potential business partner, particularly from the CIS region, unexpectedly offers to start partnering with you in a sector which you previously accessed through Russia or Belarus. The risk is that a third country is being used to hide imports or exports to or from Russia or Belarus.
  • An individual or company contacts you and offers incredibly good-value terms on a one-time transaction in a sector in which you do not usually operate. The risk is that Russia or Belarus is looking for deliveries of forbidden goods, particularly in the IT and technology sectors.
  • You use an intermediary who does not give exact documented information about the source or destination of goods, or about the manufacturer or recipient. There could also be signs of forgery or amendment in the documents. The risk is that one of the parties involved in the transaction chain is under sanction.
  • Russian or Belarussian bank accounts or addresses in these countries appear on documents or payment details issued by business partners in EU or third countries. The risk is that the transactions are being made in the interests of sanctioned individuals.
  • New business partners, particularly from EU member states, have the characteristics of a shell corporation, that is, the exact ownership structure is hidden or extremely complicated, they make frequent use of offshores, the true beneficiary is unknown. The risk is that shell companies belonging to sanctioned individuals are used.
  • An uncharacteristically large number of intermediaries are taking part in the transaction, causing difficulties in determining the end recipient or sender. The risk is that the transaction chain involves sanctioned individuals.
  • Deliveries of goods under sectoral sanction from third countries near to the Russian or Belarussian border or large transport hubs or ports. The risk is that, after delivery, the goods will be transported to one of these countries.

Citadele has previously published useful information on the new sanctions and advice on working with the bank:

In addition, we would like to inform you that on March 17th this year, from 9 a.m. to 1 p.m., the Latvian Chamber of Commerce and Industry will be organising a seminar in collaboration with Finance Latvia, the Employers’ Confederation of Latvia, the Ministry of Foreign Affairs and the Financial and Capital Market Commission. The seminar is aimed at business owners, and aims to improve understanding of how to apply the international sanctions against Russia and Belarus. One of the speakers will be Citadele’s leading sanctions expert, Saiva Krastiņa, who will speak about the evasion risks of the new sanctions. Please see the information published by the Latvian Chamber of Commerce and Industry and their partners for more information on how to participate in the seminar.

About Citadele Bank

Citadele’s mission is to modernise the banking sector and offer more opportunities to clients and businesses throughout the Baltics. Citadele is the second largest bank in Latvia by assets and business loan portfolio. In 2021, Citadele issued €1.1 billion in new loans in the Baltics, with its total loan portfolio reaching €2.7 billion, while total deposits reached €3.8 billion by the end of the year.

Alongside classic banking services, Citadele offers its clients a range of services based on next-generation financial technology, including its modern app, contactless payments and instant payments. Citadele was the first in the Baltics to introduce opening an account with a selfie, payment rings and payments to mobile numbers.

The Citadele group is managed from Latvia. Its subsidiaries and branches operate in Latvia, Lithuania and Estonia.

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