EU Asks Companies to Double Down on Russia-Related Compliance Programs

The EU last week called on traders to bolster their export compliance programs, warning that it plans to continue expanding its restrictions on Russia and will target more third-country customers illegally transshipping controlled items to Russia’s military.

The European Commission’s Directorate General for Trade said U.S., Japan and U.K. officials met July 10 to discuss ways to “align and enhance our export restriction measures” against Moscow. Although it called its current controls “unprecedented and massive,” it also warned that Russia is looking for new ways to circumvent those measures, and it must not buy “either directly from the coalition of partner nations, or indirectly through transshipment networks often involving non-sanctioning third countries.”

“Companies that seek to profit from selling coalition commodities, software and technology into Russia do so at our collective expense,” the directorate said.

It said the EU will “continue enhancing and expanding, as appropriate, regulatory requirements in light of information from the battlefield, in order to maintain the effectiveness of our measures.” EU member states “will continue to hold those who violate our laws accountable.”

The directorate also said it's “grateful” for companies that are devoting resources to their sanctions and export control compliance programs, and it plans to issue more guidance on those measures. But it also said industry should do more.

“We call on responsible traders to improve export compliance systems and exercise enhanced due diligence,” the EU said. “This includes making efficient use of sources such as public business registries, commercially available trade databases, and information collected by non-profit organizations to identify companies that present a high risk of future diversion.” The directorate said exporters and other companies should specifically monitor for customers “with a prior record of diverting controlled items from our substantially aligned export control systems to Russia.”

“The ability of industry to identify high-risk transactions can make a difference,” the directorate added. “Our collective actions will be both complementary and coordinated so that we continue to effectively address this ongoing threat to international security.”