UK Sanctions Russia Procurement Networks, Issues Guidance on Sanctions Evasion
The U.K. added 29 entries to the Russia sanctions regime Nov. 8, targeting Russian gold refiners and producers as well as international networks supporting the country's gold, oil, finance and defense sectors. The country's National Crime Agency also issued a new alert to make financial institutions aware of how Russia is using gold to evade sanctions.
Among those sanctioned was a "covert procurement network" used by Russia to import critical western technology, including OOO TK Fly Bridge, a company procuring dual-use goods for Russian electronics producers NPP Istok and Ecitech. The country also designated Paramount Energy & Commodities DMCC, a firm "known to employ opaque ownership structures" and that has been used by Russia to "soften the blow" of oil-related sanctions imposed by the Group of 7 countries.
The U.K. also sanctioned two of Russia’s largest gold producers, Nord Gold PLC and Highland Gold Mining Limited, alongside a United Arab Emirates-based network responsible for funneling more than $300 million in gold revenues to Russia. Included in that network is gold trader Paloma Precious DMCC and Zimbabwean national Howard Jon Baker.
"Today’s sanctions will hit those who have provided succour to [Russian President Vladimir] Putin by helping him to lessen the impact of our sanctions on Russian gold and oil -- 2 critical sources of revenue for the Russian war machine," said U.K. Foreign Secretary James Cleverly. He said the country plans to continue to "root out and close down these circumvention avenues."
The National Crime Agency's "red alert" warns U.K. banks and other companies of "deliberate attempts" by Russia to launder sanctioned gold and mask its origin "so that it can be hidden in supply chains and sold in the UK and around the world." The agency said gold exported from Russia is increasingly being shipped to countries that don't have sanctions in place against the metal, and once it's melted down and recast or refined, it's origin can't be determined. Russian gold can then be sold to another country "who may be unaware of the true origin," the U.K. said.
The agency urged banks and others to submit a suspicious activity report to the U.K. government if it suspects a transaction is using gold to evade sanctions. Entities that submit a report should include "XXJMLXX within the text and the reference 0731- NECC for this alert," it said. The agency also said companies should report suspected sanctions breaches to the Office of Financial Sanctions Implementation.
The alert also includes a range of "indicators" that may signal a party is using mined gold, recycled gold, investment gold or other types of gold to evade sanctions, including suspicious cargo movements, incomplete or incorrect bills of lading, cash-based transactions, a new customer demanding high volumes of recycled gold and unrealistic pricing of gold for sale.