Financial Trend Analysis: Trends in Bank Secrecy Act Data Suspected Evasion of Russian Export Controls

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Trends in Bank Secrecy Act Data:
Suspected Evasion of Russian Export Controls
This Financial Trend Analysis (FTA) describes financial trends based on financial intelligence received by the Financial Crimes Enforcement Network (FinCEN) related to suspected evasion of Russia￾related export controls. Following Russia’s invasion of Ukraine, FinCEN and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) issued two joint Alerts urging vigilance on the part of U.S. financial institutions for potential attempts by Russia to evade U.S. export controls: FinCEN and the U.S. Department of Commerce’s Bureau of Industry and Security Urge Increased Vigilance for Potential Russian and Belarusian Export Control Evasion Attempts (Alert FIN-2022-Alert003 on 28 June 2022) and Supplemental Alert: FinCEN and the U.S. Department of Commerce’s Bureau of Industry and Security Urge Continued Vigilance for Potential Russian Export Control Evasion Attempts (Alert FIN-2023-Alert004 on 19 May 2023). These Alerts build on the national priorities for anti￾money laundering and countering the financing of terrorism that FinCEN issued on 30 June 2021, which included corruption and transnational criminal organization activity. Bank Secrecy Act (BSA) reports filed in response to the joint Alerts have provided BIS with critical insight into Russian procurement activities that tips Special Agents about potential violations of the Export Administration Regulations. These suspicious activity reports are actively reviewed, and when financial activity is combined with BIS enforcement data, it has directly enabled export enforcement actions. Specifically, visibility into the financial networks of Russian proliferators, shell companies, and fronts has predicated new investigations and bolstered existing ones, resulting in detentions and seizures of unauthorized exports, and the application of BIS’s enforcement authorities that can result in criminal and/or administrative sanctions. In addition to law enforcement activities, BSA reports have allowed BIS to leverage unique and powerful regulatory tools, such as the Entity List, to disrupt organizations attempting to circumvent Russia-related sanctions. BSA reports have enhanced and will continue to enhance BIS’s enforcement of U.S. export controls. This FTA provides pattern and trend information contained in BSA reports filed between June 2022 and July 2023 on suspected evasion of Russian export controls in response to these Alerts.1 These BSA reports detailed almost one billion dollars in suspicious activity. Executive Summary: In response to Russia’s unprovoked military invasion of Ukraine on 24 February 2022, FinCEN implemented multiple lines of effort to analyze and share financial intelligence with the public, law enforcement agencies, and other relevant stakeholders.2 On 28

1. This report is issued pursuant to section 6206 of the Anti-Money Laundering Act of 2020 (AMLA), which requires
   the Financial Crimes Enforcement Network (FinCEN) to periodically publish threat pattern and trend information derived from BSA filings. The AMLA was enacted as Division F, §§ 6001-6511, of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, Pub. L. 116-283 (2021).
2. Since March 2022, FinCEN has also published several Alerts urging U.S. financial institutions to be vigilant against
   efforts to evade the expansive sanctions and other U.S.-imposed restrictions implemented in connection with Russia’s unprovoked military invasion of Ukraine. These Alerts provide select red flags to assist in identifying potential sanctions evasion activity and remind financial institutions of their BSA reporting obligations, including with respect to convertible virtual currency.