FinCEN analysis: Trends in Russia export control evasion attempts

FinCEN leveraged information derived from Bank Secrecy Act (BSA) reporting after it issued joint alerts with the Department of Commerce’s Bureau of Industry and Security (BIS) addressing potential attempts by Russia to evade U.S. export controls, said acting FinCEN Director Himamauli Das in a press release Friday.

The agency’s financial trend analysis found patterns on suspected evasion of export controls to aid Russia’s war in Ukraine, including:

• Suspicious transactions by intermediary countries showing purchased U.S.-origin goods on behalf of Russian end users;
• Suspicious transactions between end users in Russia, China, Hong Kong, and Turkey, among other countries;
• High representation from the electronics industry, with illicit actors potentially associated with or directly facilitating Russian export control evasion; and
• Companies in the industrial machinery industry potentially supplying Russia with equipment.

During the review period, U.S.-based depository institutions filed 96 percent of the 333 reports that referenced the joint alerts, FinCEN noted in the analysis. Other types of financial institutions, including holding companies or financial technology companies, submitted roughly 4 percent of the BSA reports.

Countries involved in suspected export control evasion attempts included the United States, Russia, China, Hong Kong, Turkey, United Arab Emirates, United Kingdom, Canada, Singapore, and Cyprus.

“Our partnership with FinCEN has illuminated Russian efforts to evade our export controls through the receipt of targeted [SARs] from financial institutions,” said Matthew Axelrod, assistant secretary of commerce for export enforcement at the BIS, in FinCEN’s release. “We have used these SARs to initiate investigations of export control violators, as well as designate parties on our entity list to deprive [Russian President Vladimir Putin’s] war machine of technologies it needs to prosecute its illegal invasion of Ukraine.”