In this insightful solo episode of Crime, Corruption, and Compliance, host Michael Volkov delves into the details of the first-of-its-kind Joint Compliance Note (JCN) regarding the evasion of Russia sanctions and export controls. This noteworthy document has been jointly issued by the United States Justice Department, the Department of Commerce, and the Treasury Department, highlighting its significance in the world of compliance.
Throughout the episode, Michael explores the critical red flag lists, government expectations, and alerts to common high-risk scenarios provided by the JCN, emphasizing its crucial role in guiding organizations through potential compliance challenges. With the U.S. Russia Sanctions and Export Control Program being unprecedented in scope and complexity, Michael sheds light on the challenges faced by trade compliance officers and the steps organizations can take to mitigate risks.
Key ideas you’ll hear in this episode:
1. The JCN is an essential resource for compliance professionals, detailing red flags and tactics organizations and individuals use to evade applicable sanctions and export controls.
2. The joint issuance of this document by the DOJ, OFAC, and BIS highlights the importance placed on organizations to implement and maintain risk-based compliance programs.
3. Third-party intermediaries and transshipment points are often exploited to disguise the involvement of specially designated nationals (SDNs) or parties on the BIS entity list in transactions, obscuring the true identities of end-users.
4. The JCN provides an invaluable list of red flags to watch for if a company suspects a customer is using a third party to evade sanctions or export controls, with real-world examples for context. Some of the red flags to watch out for include the following:
4.1 Use corporate vehicles, such as shell companies, to obscure ownership, source of funds or countries involved.
4.2 A customer’s reluctance to share information about the end use of a product.
4.3 Use of shell companies for international wire transfers.
4.4 Declining customary installation, training, or maintenance services.
4.5 Mismatched IP addresses that do not correspond to a customer’s reported location data.
4.6 Last-minute changes to shipping instructions contrary to customer history or business practices.
4.7 Payments from a third-party country or business not listed on the end-user statement.
4.8 Use of personal email accounts instead of company email addresses.
4. 9 Operating complex and/or international businesses using residential addresses or addresses common to multiple closely held corporate entities.
4.10 Changes to standard letters of engagement that obscure the ultimate customer.
4. 11 Transactions involving a change in shipments or payments previously scheduled for Russia or Belarus.
4.12 Transactions involving entities with little or no web presence.
4. 13 Routing purchases through certain transshipment points commonly used to redirect restricted items to Russia or Belarus illegally.
4. 14 In the face of potential violations, companies are encouraged to utilize voluntary disclosure programs maintained by DOJ, OFAC, and BIS.
4. 15 Compliance and trade compliance professionals should review the JCN thoroughly to ensure overall trade compliance and be ready to conduct additional due diligence when confronted with any red flags. See less -
