G7 releases guidance on preventing Russian export controls and sanctions evasion

The guidance published by the G7 (consisting of the United States, Canada, France, Germany, Italy, Japan, the United Kingdom, and the European Union) is aimed at helping businesses across the G7 with the information necessary to identify and respond to Russia’s evolving evasion tactics and ensure compliance with export controls and sanctions against Russia.

The guidance initially highlights the actions taken by Russia to evade export controls and sanctions and emphasises the importance for all parties in the supply chain (including exporters, re-exporters, manufacturers, distributors, resellers and service providers) to be aware of the diversion risks posed by Russia's procurement efforts and to adopt appropriate measures to mitigate such risk.

The guidance then highlights the following key focus points to avoid export control and sanctions evasion:

1. The G7's Common High Priority List, which identifies items and technologies that are of particular concern and pose a heightened risk of illicit diversion to Russia because of their importance to Russia's war efforts. These include inter alia advanced integrated circuits, electronics related to wireless communications, electronic components used in Russian weapon systems, etc. 
2. Red flag indicators to help businesses detect potential attempts to circumvent export controls or sanctions. Examples include unusual shipping, changes in the customers or requests for items that do not align with the customer's business profile. 
3. Best practices for addressing identified red flags and enhancing due diligence procedures of businesses exporting sanctioned products, including guidance on how to perform due diligence on business partners.

Additionally, the guidance includes references to relevant screening tools and official guidance documents from the G7 countries to further support due diligence efforts.

The guidance is also interesting in light of the 14th EU sanctions package against Russia as adopted on 24 June 2024 (Council Regulation (EU) 2024/1745) which introduced a new requirement in EU Regulation 833/2014 for EU operators to undertake their best efforts to ensure that legal persons, entities or bodies established outside the EU that they own or control do not participate in activities that undermine the restrictive measures provided for in EU Regulation 833/2014. When implementing compliance measures, EU entities with non-EU subsidiaries should therefore consider implementing such measures for all subsidiaries, including non-EU subsidiaries (which are not under EU jurisdiction) to avoid that such subsidiaries (inadvertently) participate in activities that undermine the EU sanctions. 

Want to know more?

If you have any questions or if you would like to know how best to implement the new guidance in relation to your current internal sanctions and export control compliance procedures, please contact Plesner's Export Control and Trade Sanctions team. 

Read the G7 Guidance on preventing Russian export control and sanctions evasion