Export Control & Sanctions

Due Diligence Program. 

Enterprise Risk on entities from Russia

KYC/KYCC (Know Your Customer's Customer) check for Russia, CIS/ex-USSR

Pre-shipment entity screening and Post-Shipment Verification

The U.S. Export Controls

 

the U.S. government export control rules that companies need to abide by when exporting to this country. Export Administration Regulations (EAR) and the implementation of risk management check with a list of “red flags” BIS has developed, or warning signs, and “Know Your Customer” guidance intended to aid exporters in identifying possible violations of the EAR

U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security requirements.

k on entities from Russia

Based on 20 years of experience in working with Russia and the countries of the former USSR, we will offer and implement a reliable risk management system in your company

 

Working on a gap analysis of the sanctions program we recommend:

  • Allocate 2-3 risky countries between your clients or belonging to OFAC targeted countries

  • Study the methodology of ways to bypass the defense you have built to eliminate the sanction risk – to pass through your KYC process

  • Use Russian screening systems for checking and scoring Russian legal entities and individuals

  • Identify fraud at the level of relationships at the level of founders, shares in company structures, legal addresses from the list of mass addresses or addresses associated with blocked sanctions by companies

While export lawyers will help you understand the requirements of the regulators listed below.We will be able to integrate their execution into your daily workflow.

Export Administration Regulations (EAR). The Bureau of Industry and Security (BIS) guidance:

Red Flag Indicators

Things to Look for in Export Transactions

Use this as a checklist to discover possible violations of the Export Administration Regulations. You may also wish to visit our page, "Know Your Customer Guidance."

  • The customer or its address is similar to one of the parties found on the Commerce Department's [BIS'] list of denied persons.

  • The customer or purchasing agent is reluctant to offer information about the end-use of the item.

  • The product's capabilities do not fit the buyer's line of business, such as an order for sophisticated computers for a small bakery.

  • The item ordered is incompatible with the technical level of the country to which it is being shipped, such as semiconductor manufacturing equipment being shipped to a country that has no electronics industry.

  • The customer is willing to pay cash for a very expensive item when the terms of sale would normally call for financing.

  • The customer has little or no business background.

  • The customer is unfamiliar with the product's performance characteristics but still wants the product.

  • Routine installation, training, or maintenance services are declined by the customer.

  • Delivery dates are vague, or deliveries are planned for out of the way destinations.

  • A freight forwarding firm is listed as the product's final destination.

  • The shipping route is abnormal for the product and destination.

  • Packaging is inconsistent with the stated method of shipment or destination.

When questioned, the buyer is evasive and especially unclear about whether the purchased product is for domestic use, for export, or for reexport

Decide whether there are "Red Flags"

Take into account any abnormal circumstances in a transaction that indicate that the export may be destined for an inappropriate end-use, end-user, or destination. Such circumstances are referred to as "Red Flags." Included among examples of red flags are orders for items which are inconsistent with the needs of the purchaser, a customer's declining installation and testing when included in the sales price or when normally requested, or requests for equipment configurations which are incompatible with the stated destination (e.g.--120 volts in a country with a standard of 220 volts). BIS has developed lists of such "Red Flags" which are not all-inclusive but are intended to illustrate the types of circumstances that should cause reasonable suspicion that a transaction will violate the EAR. You should also review U.S. Government Lists to check to identify parties prohibited or restricted from participating in U.S. export transactions as well as BIS's Unverified List of parties whose bona fides BIS has been unable to determine in end-use checks.

If there are "Red Flags"

If there are no "Red Flags" in the information that comes to your firm, you should be able to proceed with a transaction in reliance on information you have received. That is, absent "Red Flags" (or an express requirement in the EAR), there is no affirmative duty upon exporters to inquire, verify, or otherwise "go behind" the customer's representations. However, when "Red Flags" are raised in the information that comes to your firm, you have a duty to exercise due diligence to inquire regarding the suspicious circumstances and ensure appropriate end-use, end-user, or ultimate country of destination in the transactions you propose to engage in.

The duty to check out "Red Flags" is not confined to transactions involving the "know," "reason to know," or "is informed" sections of the EAR. Parties engaging in export transactions are required by the EAR to obtain documentary evidence concerning the transaction; misrepresentation or concealment of material facts is prohibited, both in the licensing process and in all export control documents. You can rely upon representations from your customer and repeat them in the documents you file unless "Red Flags" oblige you to take verification steps.

Do not self-blind

Do not cut off the flow of information that comes to your firm in the normal course of business. For example, do not instruct the sales force to tell potential customers to refrain from discussing the actual end-use, end-user and ultimate country of destination for the product your firm is seeking to sell. Do not put on blinders that prevent the learning of relevant information. An affirmative policy of steps to avoid "bad" information would not insulate a company from liability, and it would usually be considered an aggravating factor in an enforcement proceeding.

Employees need to know how to handle "Red Flags." Knowledge possessed by an employee of a company can be imputed to a firm so as to make the firm liable for a violation. This makes it important for firms to establish clear policies and effective compliance procedures to ensure that such knowledge about transactions can be evaluated by responsible senior officials. Failure to do so could be regarded as a form of self-blinding.

We have gained solid experience for the last 20 years in export to Russia

Our services:  KYCC ((Know you customer customer) for Russia (ex-USSR), “Manual & sound screening” of companies for check of potential risk

Key advantages  for US exporter / importer to use professional help for monitoring and analysis are:

Every month in Russia, 35,000 companies are liquidated, 1,000 companies declare themselves bankrupt and 100,000 arbitration court rulings take place.

Sanctions adviser capabilities in screening of Russian companies:

Reports on companies and key information provides information on legal entities and individuals in the form of expanded reports. They include the latest data on registration; restructuring; historical changes; co-owners and ultimate beneficiaries; private individuals; financial indicators; collateral; court cases and other details needed to make business conclusions and assess potential risks.

Sanctions adviser’s compliance platform  in numbers:

16,500,000 notices of bankruptcies and arbitration court cases + 6,500 per day

250,000,000 companies in the international database + 2 million per quarter

17,600,000 financial statements of companies, banks and insurers + 2 million per year

6,000,000 commercial and government contracts + 12,000 per day

2,300,000 registration information on CIS legal entities + 20,000 per quarter

800,000 notices of company liquidation and reorganisation + 2,300 per month

2,600,000 quarterly issuer reports + 200,000 per quarter

197,000,000 media reports and publications + 230,000 reports per day

registration information on legal entities + 1,500 per day

Sanctions adviser is the professional solution for the complete verification of any legal entity and private entrepreneur in Russia, Ukraine, Kazakhstan, Belarus and Kyrgyzstan.

Comprehensive assessment of the financial condition of a company Financial reports in the form of balance sheets, as well as profit and loss statements, are available in adherence to Russian Accounting Standards.

Working on a gap analysis of the sanctions program in work with Russia & CIS we recommend:

  • Allocate 2-3 risky countries between your clients or belonging to citizenship (OFAC targeted countries)

  • To drive on the Internet in a foreign language the formulations proposed below and study the methodology of ways to bypass the defense you have built to eliminate the sanction risk – to pass through your KYC process

  • Use Russian screening systems for checking and scoring Russian legal entities and individuals

  • Identify fraud at the level of relationships at the level of founders, shares in company structures, legal addresses from the list of mass addresses or addresses associated with blocked sanctions by companies

 

SA has an experienced team of integrators of Russian Screening Tool KONTUR

 

At the first stage, we will analyze your existing screening system

We will conduct tests for scoring gap analysis using cases with a non-obvious risk

Based on our experience, we will show what tools and methods can be used to reduce the risk and make the verification of your client deeper and more reliable.

We will implement a screening system in addition to yours and train your staff

Know Your Customer (KYC) and due diligence for Russia

If you:

  • You are implementing Know Your Customer (KYC) and due diligence for Russian Entities

  • You have already have an in-house data analytical tool but not especially for Russia

  • You understand that identifying exposure to sanctions risk requires far more than scraping a list

 

How to illuminate and expose obfuscated and illicit activities of bad actors?

 

 

If you are:

  • A Cryptocurrency exchange or Financial institution with Russian clients

  • A Biotech and pharmaceutical company, logistics provider, manufacturer working with Russia

  • OFAC and AML lawyer, Export control adviser

 

You have to implement Geographic Focus: country or region-specific ‘deep dives’ for financial, logistics,

or supply hubs companies, the identification of customers using in-house data analytical tool from the country you are working with

 

In our verification methodology we proceed from the following reasons:

  • American screening tools cannot be updated and completed with data like Russian in-house data analytical tool

  • Therefore, it is necessary to use a combination of these two resources, at least at the review level with «red flags»

  • The verification of the legality of passports, on-site verification at the address of the audited company, in-depth analysis of affiliation, monitoring of changes made to the state register, etc. can be checked exclusively by the Russian resource

 

Know-your-customer and due-diligence practices for Russia

If there is a red flag indicator you can order an on-site inspection of the Russian entity, physically accessing a company's site

The report contains the following information:

  • Availability of a property with photographic fixation

  • Availability of signs and plates

  • The presence of staff, management and customers

  • Availability of technical means and other facilities necessary for conducting business and executing contracts.

  • Other available documentary evidence of the location of the organization at the specified address

  • The results of conversations with those present at the exit address to obtain information about the presence or absence of signs of activity

 

Know-your-customer and due-diligence practices for Russia

If there is a red flag indicator you can check the Russian passport of your client for validity

The range of KONTUR's softwares check documents against the data of invalid Russian passports of the Ministry of Internal Affairs of the Russian Federation.

This list includes the following passports:

  • lost;

  • abducted;

  • issued on lost or stolen forms;

  • issued in violation of the established procedure;

  • invalidated.

 

Any questions?

 

Sanctionsadviser.com - official integrator of the range of KONTUR's softwares

Supporting The U.S. companies in export to Russia & CIS markets

Planning and Strategy for entry or expansion.

Due diligence of existing or potential partners in the region with a sanctions risk overlay

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SANCTIONS ADVISER  

International Trade Solutions

Helping American Exporters to achieve the highest level of compliance in trade on ex-USSR markets

Email: rod@sanctionsadviser.com
Tel:     9143430062

Promontory Dr. W., Newport Beach, CA 92660

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