Russian sanctions create incentives for TBML and illicit trade

Sanctions imposed on Russia create incentives for illicit trade schemes and trade-based money laundering (TBML) involving myriad of illicit methods according to an associate professor at the King’s Russia Institute in London.

Alexander Kupatadze, who specialises in organised crime and corruption issues in post-Soviet Eurasia, says Russia is now the most sanctioned economy in the world.

Illegal frontiers

In an article published in the Small Wars Journal, Kupatadze says these unprecedented sanctions open new frontiers of illegal activity, with the likely outcome the expansion of illicit supply chains for delivering regulated or prohibited goods

Forms of TBML that may be used include transhipment, whereby Russian exporters send their produce via a non-restricted third country for eventual re-export – after some processing or repackaging – to a sanctioning country.

Russian importers may also over-invoice the value of imports so that misrepresented value can be moved offshore according to Kupatadze.

Shell companies

The associate professor also reports that Russian ships have been noticed turning off their tracking systems at double the normal weekly rate, another indication of possible sanctions-evasion involving this widely-used method.

Kupatadze also says the extensive use of shell companies is problematic in achieving compliance regarding Russia-related trade restrictions.

Part of King’s College London, King’s Russia Institute focuses on Russia-related activities, including business and government, education and the cultural and creative sectors.

Alexander Kupatadze’ article, Russia after Sanctions: Pirate or Mafia State?, can be found here.


Categories: Trade Based Financial crimes News

Tags: , , , , , ,

%d bloggers like this: