BIS Published Guidelines on Suspicious Transactions under Sanctions

14 July 2022
Ellina Izotkina
Senior Associate

The US Financial Crimes Enforcement Agency (FinCEN) and the U.S. Bureau of Industry and Security (BIS) have issued a joint review of recommendations and "red flags" that they suggest financial institutions should use to prevent violations of export regulations and restrictions imposed on Russia.

Categories of "suspicious" goods

The Bureau of Industry and Security of the U.S. Department of Commerce has identified a list of goods that may cause special attention, since such goods can be delivered, according to FinCEN and BIS, to Russia and Belarus for military purposes.

This list includes spare parts for aircraft, antennas, breathing systems, cameras, GPS systems, vacuum pumps and other goods that carry military and defense potential. A license is required to export such goods.

BIS remains concerned about exports that support the development of marine technologies, microelectronics and other technologies that can be used to support the Russian military and defense sector. In addition, the use of some of these goods by third countries to create final products that can later be exported to Russia or Belarus is also prohibited.

Categories of "suspicious" transactions

BIS points out that to circumvent sanctions checks, unscrupulous counterparties purchase low-tech consumer goods that do not require licenses or special permits. The Bureau particularly draws attention to the fact that illegal entities may also involve accomplices-shippers (or customs brokers) to hide either the nature of the goods or their final destinations, similar to other qualities of illegal goods.

Also, BIS separately identifies criteria for suspicious transactions as a list. According to American regulators, the following categories fall into "suspicious transactions":

  1. Delivery of goods and settlement operations with Russia and Belarus through countries that may be "transshipment points" (Armenia, China, Singapore, Israel, India, Turkey, Kazakhstan and others).
  2. Transactions with an organization whose activity or location may indicate circumvention of existing restrictions in the field of export control
  3. A person acquires vessels without a specific economic or business purpose or sells vessels and other property from the US sanctions list
  4. Transactions involving organizations that are practically not represented on the Internet and companies whose website contains information about the "special" nature of their activities.
  5. The parties of the transaction have addresses that do not physically exist or are a place of residence; or are located at the same address with the sub-sanctioned person.
  6. Transactions involving vessels whose location has recently been changed from the Russian Federation to another territory; transactions with companies that have changed jurisdiction from the Russian Federation to another and other jurisdictional changes in transactions with the Russian Federation to another country.
  7. Transactions with goods atypical for the place of their delivery; transactions related to atypical routes of delivery of goods and destination.
  8. Operations involving companies licensed by the Federal Security Service of the Russian Federation (FSB), allowing these companies to work on projects classified as state secrets.
  9. Transfers to the accounts of persons previously convicted of violating U.S. export control rules.
  10. Transactions involving persons who previously bought dollars in large quantities (if there is other derogatory information).
  11. With the participation of persons related to Russian state-owned companies related to export activities, as well as non-Russian persons cooperating with the named Russian ones.
  12. The use of commercial checking or currency accounts by merchants from the United States engaged in the import and export of electronic equipment or oil, when transactions are carried out with third country-based companies that also have offices in Russia; or similar transactions with non-Russian companies reselling goods to Russia.
  13. Transactions involving freight forwarding companies, which are also indicated as the final consumer of the product, especially goods sent to traditional Russian transshipment hubs.