Proliferation Finance

What you should know 

 Proliferation finance in its current form is a relatively new topic. For example, the Financial Action Task Force (FATF) added proliferation finance to its recommendations (along with countering terrorist financing and money laundering) in 2012. [https://www.fatf-gafi.org/about/historyofthefatf/]. The issue of how proliferation is financed predates this development and is broader in conception than FATF's approach, which is relatively narrowly focused on designated entities.

Introduction to Export Control

What You Need to Know  

Export controls give states a tool to ensure that exported goods and technology are not used to support end uses and end users of concern. End uses of concern can include state programs of concern, as well as terrorism or sanctions evasion. Export controls are always more effective when implemented by a larger number of states.  Cooperation on export controls is often in the interests of states, even amongst adversaries.

THE 2021 DAN-BUNKERING CASE AND DUE DILIGENCE

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INTRODUCTION 

In December 2021, a Danish court fined and convicted the Dan Bunkering shipping firm and its parent company, Bunker Holdings, millions for dollars and gave a four-month suspended prison to the company’s CEO over a European Union sanctions-busting scheme.[1] The company was convicted of selling jet fuel to Russian companies, which in turn transferred the fuel on to Syria in contravention of EU sanctions. The company, which is the largest bunker supplier in the world, is alleged to have made 33 sales of jet fuel worth $102 million between 2015 and 2017.[2]  

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RUSSIA’S SEMICONDUCTOR CATASTROPHE: HOW EXPORT CONTROLS AND SANCTIONS WILL AFFECT RUSSIA

Russia Semiconductors

New export controls on semiconductors to Russia, in combination with sanctions impacting the Russian economy. Some estimates put the trade of semiconductors to Russia at $50 billion.[1] But these impressive number bely the fact that Russia buys end products with chips and integrated circuits and does not have a strong industrial base to produce cutting edge semiconductors themselves despite attempts by the Kremlin to build a domestic production capacity.[2]

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RUSSIA’S AEROSPACE CATASTROPHE: HOW EXPORT CONTROLS AND SANCTIONS WILL AFFECT RUSSIA

Russian Aircraft
Russia’s civil aviation sector is already in a deep crisis due to the growing package of export control and sanctions leveled against the country. The sanctions and export controls are affecting the country’s civil air fleet on multiple levels and exacerbating decades of neglect in key sectors of the country’s industrial base. The U.S. and EU sanctions, in particular, have led companies to freeze technical support, spare parts, supply of aircraft, leasing of aircraft, and maintenance to Russia. Around 700 of Russia approximately 900 aircraft designed for civil aviation will be affected in one way or another. Russia’s civil air fleet is overwhelmingly reliant on Western manufactured engines. Previous rounds of sanctions have stimulated Russia’s domestic development of composite materials and avionics, but full commercial engines will be a difficult transition in conditions of near autarky. Aviation data acquired by the Wall Street Journal shows that of commercial aircraft serving of in storage in Russia, there are 370 Boeing aircraft and 345 Airbus. The third most-popular planes are produced by Sukhoi, but these airframes are reliant on joint Russian-Western partnerships. According to the analysis of the Wall Street Journal, only 17% of Russia’s domestic air fleet is domestically produced.

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EFFECTS OF SANCTIONS ON RUSSIA’S PHARMACEUTICAL LANDSCAPE

Although the economic sanctions wielded by the West against Russia do not target its pharmaceutical industry or medical supply chain, the resulting ripple effects may adversely impact both. Since the early 2000s, Russia has had a keen interest in developing its biotech industry. This included both the agricultural and the pharmaceutical sector. While the agricultural sector was relatively successful and Russia rose to become the world’s largest provider of wheat, the pharmaceutical sector did not achieve the same level of growth. Russia relies heavily on the international market, mainly from its European trade partners, to cover the quantity and diversity of medical drugs its citizens consume. In 2019, Russia was importing 70% of the drugs the nation was consuming. Russia’s pharmaceutical industry struggles to domestically produce an adequate amount of medical drugs and is therefore reliant upon imports.

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CAATSA: THE MOST IMPORTANT SANCTIONS AUTHORITY YOU HAVE NEVER HEARD OF

Russia Sanctions

Since the Russian Federation’s invasion of Ukraine that began in late February, the US has spearheaded sanctions efforts targeting key entities in strategic sectors and individuals in Russia. While media coverage frequently focuses on those impacted by the sanctions, little attention is often given to the process through which the sanctions are authorized. In the instance of Ukraine, one of the authorities the United States can leverage is a lesser-known law: the Countering American Adversaries Through Sanctions Act (CAATSA).

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