Russian Sanctions Guidance by The E5

Export Enforcement Five

The E5 refers to the Export Enforcement Five. The E5 consists of Australia, Canada, New Zealand, the United Kingdom, and the United States. These countries have implemented comprehensive packages of sanctions and export controls aimed at Russia. This to weaken their military capabilities and show support for Ukraine.

Additionally, the E5 packages are part of a larger collective known as the GECC. The GECC stands for the Global Export Control Coalition. Which is a partnership of 39 countries. In addition to the E5 countries, it includes all member countries of the European Union, Iceland, Liechtenstein, Norway, Switzerland, Australia, Japan, the Republic of Korea, and Taiwan.

The List Battlefield equipment

In collaboration with the GECC, the E5 has agreed to prioritize controlled items in specific HS codes that are used by the Russian weapons industry. This list includes items essential for manufacturing battlefield equipment. The list, which is mapped to HS6 codes for easy reference. The list is divided into four tiers. Tier 1 focuses on integrated circuits, while Tier 2 includes electronic items related to wireless communications, satellite-based radio, navigation, and passive electronic components. These two tiers are most critical.

Risk-Based Approach

Exporters are strongly encouraged to conduct additional due diligence when encountering any of the listed HS codes. This is to ensure the legitimacy of the end user and to prevent attempts to evade export controls or sanctions programs. It is particularly important to be cautious when doing business with entities not directly associated with Russia but where evasion schemes are used. It is also worth noting that these items may be incorporated into your final products. And in hands of Russia it could be used if they are dismantled. Despite it seeming illogical from your perspective, if there is a high demand for an item and even if it is costly, it may be a solution that the Russian military industry chooses.

As part of your extra due diligence, the E5 has identified three diversion concerns:

• Companies that have never received exports prior to February 24, 2022.
• Companies that have received exports before that did not include any of the Tier 1 & 2 HS codes prior to February 24, 2022.
• Companies that have received exports involving Tier 1 and 2 before but have experienced a significant increase since then.

Red Flag Indicators for Export Control and Sanctions Evasion

The E5 provides a selected list of potential red flag indicators . These relate to the  risk of exporting items related to export control and/or sanctions evasion. THis element may be relevant to exporters. Along with the customer and transaction considerations, appropriate risk-based due diligence should be conducted.

Transactional and Behavioral Red Flags

Nine indicators are provided. An example is a customer outside of Russia who lacks or refuses to provide details. Think about details related to banks, shippers, third parties, end-users, intended end-use, and/or company ownership. Often, such customers request that information not be disclosed at the moment.

Responsibilities of the Exporter

Failure to comply with these regulations can result in reputational harm, fines, and/or criminal charges. It is important to have a good understanding of the laws and your obligations.

Considerations prior to Export Declaration

A helpful list of links is provided. These include the consolidated list of the E5 countries and other resources such as the Handbook of Export and Import Commodity Codes of Canada, BIS Policy Guidance, UK Export Control Guidance, and more.

Conclusion

Similar to earlier publications by the European Commission, this document provides information, thoughts, and tools to build a robust compliance program to prevent any breaches of export control or sanctions programs related to Russia.

Read the full guidance here.

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