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The US government’s enforcement of the Uyghur Forced Labor Prevention Act (UFLPA) is resulting in an increased number of shipments being detained at the US border, costing importers millions of dollars. The Department of Homeland Security’s enforcement efforts are exposing the underlying forced labor connections of goods imported by US companies and putting these firms’ reputations at risk. FiveBy assesses that US companies that import apparel, footwear, textile, electronics, solar panels, and automotive parts from entities with ties to China, Malaysia, and Vietnam are most at risk of losing profits and having their shipments detained or confiscated.

  • Since UFLPA went into effect last year, US Customs and Border Protection (CBP) has stopped more than 3,200 shipments, valued at more than $900 million, for inspection. Of these shipments 424—$23.82 million worth—were denied, resulting in losses for US importers. In addition, there are currently 1,723 shipments pending inspection with a total of $545.22 million hanging in the balance.
  • Of the denied shipments, many included apparel, footwear, and textile products—not surprising considering that the Xinjiang region in China produces more than 20 percent of the world’s cotton.
  • The vast majority of shipments currently pending with CBP—a total of 1,058—are electronic products, with industrial and manufacturing materials taking second place. These shipments mostly originating in Malaysia, Vietnam, China, and the Philippines, highlight the necessity of closer examination of goods with supply chains connected to these countries.
  • Products from the pharmaceuticals, health and chemicals, industrial and manufacturing, agriculture and prepared products, consumer products and mass merchandising, machinery, and base metal industries were also stopped by the CBP. These shipments mostly originated in China, Vietnam, Malaysia, Cambodia, and Hong Kong.

Customs officials in January confirmed that the majority of imports detained since the UFLPA went into effect have been solar panels made with polysilicon that was assumed to have been produced in Xinjiang. However, a report released in December by a research team at Sheffield Hallam University’s Helena Kennedy Centre for International Justice and nonprofit human rights organization, NomoGaia, also suggests that most major car manufacturers are using parts that originated in Xinjiang and were made with forced labor.

  • The exhaustive report—the culmination of a six-month investigation—found that 96 companies with ties to the auto industry were mining, processing, or manufacturing parts in the Xinjiang region, and that more than 100 international car and car part manufacturers were possibly sourcing from these companies.
  • During a recent Forced Labor Technical Expo, keynote speaker and Sheffield Hallam University professor Laura Murphy also highlighted that the school by the end of the year plans to make available in pilot form a free supply chain mapping tool. FiveBy judges that the use of this and other, similar tools will become more critical as the United States more aggressively enforces the UFLPA.

The Department of Homeland Security has created a list of entities in China tied to forced labor practices, and adding more entities to this list is one of the department’s top priorities, according to the Undersecretary for Strategy, Policy, and Plans, Robert Silvers. Persuading US partners and allies to pursue similar enforcement regimes is also high on the department’s priority list, indicating that companies with branches and subsidiaries overseas will need to understand and obey import restrictions in those countries as well.

The unique nature of the UFLPA puts the onus on the importer to provide evidence that the goods they are bringing into the United States were NOT made with forced labor – a difficult task considering the complex nature of supply chains and murky origins of many products, as well as efforts to obscure the origins of many goods to hide questionable business practices. Expert investigators can help US companies importing goods from abroad identify the origins of not only the products being shipped, but also their component parts to ensure that US firms are not engaging—even indirectly—with entities that may be using forced labor. Red flags indicating links to forced labor include companies in China that hire workers through government recruiters, provide “vocational training” and “aid to Xinjiang,” source components or other goods from factories located near detention centers, or are connected to the government’s “reeducation” efforts.

Jurisdictional and linguistic expertise, as well as monitoring developments in China and the United States and media coverage of potential business partners are critical to ensuring that goods linked to forced labor are not imported into the United States or stopped at the border, causing financial losses to the importers. A periodic review of business partners’ compliance programs can help US firms avoid financial losses, and examining all entities in the supply chain can be critical to securing the evidence CPB needs to allow the goods to enter the country. Expert FiveBy analysts can help monitor, interpret, and adapt to constantly changing US sanctions and export controls, helping protect your company’s bottom line and reputation.

For a free consultation and help with in-depth analysis of your supply chain, business partners, and other entities that may link to forced labor in Xinjiang, please click below.

FiveBy IntelSentry

Transacting in Russian-occupied territories in Ukraine has become riskier for western firms and financial institutions because Russia has been seizing businesses and schools in these jurisdictions and forcing them to register with Russian tax authorities. The new registrations and tax IDs of previously Ukrainian-owned entities make due diligence research, such as determining ownership, control, and location more challenging. US companies must ensure that they are not providing US-origin products and technologies to entities that are now controlled by Russia and that could support Russia’s operations and reeducation programs in Ukraine.

Certified FiveBy experts understand how to identify Ukrainian entities that may have been seized by Russia.

We have found that more than 2,000 entities in Ukraine have been registered as Russian companies, presenting regulatory, human rights, and reputational risks for US firms transacting in the region. Because Moscow considers these captured Ukrainian establishments to be “Russian,” software and other technologies supplied to an educational institution in Russia could be diverted to occupied Ukraine and used for military and “reeducation” activities.

  • The Russian government has seized existing Ukrainian government establishments and private businesses, as well as assets abandoned by fleeing Ukrainians, including buildings, computer equipment, and vehicles which Russian forces have used for military operations.
  • Russia has captured Ukrainian educational institutions and altered curricula in an effort to reeducate the populace. Russian administration representative in the Zaporizhzhie region, Elena Shapurova, this month signed a decree ending the compulsory study of the Ukrainian language in the region’s schools starting next fall. US-origin technologies, software, and equipment that end up in Russian-controlled schools in Ukraine could be used for reeducation purposes and to help eliminate the Ukrainian culture and identity.
  • Public procurement records reveal that Russian entities will redirect products to what appear to be other Russian entities that are registered with Russian tax IDs, but are in fact located in occupied Ukraine. The Tver government in February organized an order of laptops for educational institutions to be delivered to the Donetsk region. Supplier Gross Komp LLC is not subject to sanctions, is registered in Moscow, can purchase these laptops from western suppliers, and can forward them to the embargoed jurisdiction. Human-driven research into Russian government tenders will help catch these transactions and help prevent US goods and technologies from winding up in the hands of the Russian military or being used in human rights violations.

As Russia’s war in Ukraine rages into its second year, its military equipment has become damaged and depleted, and Moscow has turned to stripping civilian appliances for parts to repair and produce military gear. Western companies must examine their customers for possible connections to Russia’s defense sector and red flags that indicate possible diversion of dual-use components to Russia’s army.

  • Products with dual-use parts such as washing machines, refrigerators, and fans produced by western firms such as EBM, Schneider Electric, NMB-MAT, Siemens, GWE, and Ziehl-Abegg were purchased in December by Moscow-based Soyuzmetallservis LLC. Although the company’s main business activity is “wholesale trade in metals and metal ores,” its general manager Sergei Antonov also manages two metal producers in embargoed Donetsk that have a prewar history of producing metals and alloys for Russia. In addition, the company’s ultimate beneficial owner, Evgeny Yurchenko, has close ties to the Russian military-industrial complex.

Companies that sell seemingly innocuous goods such as education software, personal computers, and appliances to Russian entities could be penalized for violating export controls if they do insufficient research into end-users, and if their products wind up supporting Russia’s war in Ukraine. Significant reputational damage can also result from inadequate due diligence. FiveBy can help US companies conduct enhanced due diligence research on their business partners, customers, supply chains, and end-users to prevent financial penalties and reputational harm.

Contact FiveBy for a free consultation and reduce your risks.

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Executive Summary

The US government is taking a more hardline posture to enforce sanctions and export controls, which almost certainly will result in increased financial and criminal penalties for violators. Since Russia began its invasion of Ukraine in February 2022, US regulators have significantly expanded sanctions and other restrictions against Moscow and widened the scope of export controls to prevent Russia from obtaining the critical goods and technologies it needs to continue its war.

We judge that the increased focus on enforcement of existing sanctions and export controls will substantially impact banking and financial services, technology companies, and manufacturers of defense materiel. Applying a heightened, risk-based approach to supply-chain and end-user research will become more critical to avoiding regulatory penalties and possible criminal prosecution.

Enhanced Global Efforts Against Evasion

The Justice and Commerce departments on February 16, 2023 launched the Disruptive Technology Strike Force that will investigate and prosecute violations of export controls. The strike force is part of an increased enforcement focus that could result in financial and criminal penalties for noncompliant companies. Its priorities include preventing authoritarian governments, such as China, Iran, Russia, and North Korea from acquiring equipment that supports their military and mass surveillance operations. Agencies such as the Bureau of Industry and Security (BIS), FBI, and Homeland Security Investigations will work to protect sensitive US-origin technologies “related to supercomputing and exascale computing, artificial intelligence, advanced manufacturing equipment and materials, quantum computing, and biosciences.”

But the United States is not alone.

  • Germany plans to crack down on companies that help Russia evade sanctions and export controls, including threatening criminal prosecution for false export declarations. Companies will have to provide transparent “end-use statements,” guaranteeing their goods will not be sent to Russia.
  • The European Bank for Reconstruction and Development in February began investigating a sharp increase in Russian imports from its neighbors, coinciding with a drop in western imports due to tighter restrictions. These neighboring countries are probably an evasion route for Russia to gain access to critical technologies and other goods.
  • The G7 nations are creating a new tool to coordinate enforcement of existing sanctions against Russia in an effort to improve compliance. The “Enforcement Coordination Mechanism” will improve information sharing, including about countries and firms suspected of aiding Russia’s war in Ukraine by facilitating sanctions evasion or helping Russia access prohibited tools and technologies.
  • The EU plans to ask third countries that have seen a surge in imports from the EU of advanced technologies and other goods that could be used for military purposes by Russia to enhance trade monitoring. The EU’s foreign policy chief Josep Borrell recently highlighted that the bloc will begin punishing third countries and third parties for helping Russia evade financial and export restrictions.

Recognizing the Risks

Russia’s military is highly dependent on western technology, lacking domestically produced analogues. As western export controls and sanctions enforcement efforts become more stringent, Russian individuals, entities, and their facilitators have increased efforts to develop more sophisticated evasion techniques that will allow them to acquire restricted products.

Despite Russia’s long history of sanctions and export-control evasion, many western companies had insufficient compliance measures in place even before last year’s invasion of Ukraine. However, stopping Russia’s aggression became a major US foreign policy objective last year, and increased enforcement almost certainly makes these companies vulnerable to regulatory penalties, criminal charges, and reputational risk.

A Tri-Seal Compliance Note released by the Commerce, Treasury, and Justice Departments this month highlights the increased risks of evasion and export control violations. The note calls for companies to “include controls tailored to the risks the business faces, such as diversion by third-party intermediaries.”

The joint Financial Crime Enforcement Network (FinCEN) and BIS alert released last year similarly outlines red flags indicating Russian sanctions and export control evasion, many of which are complex and require nuanced expertise to detect. To limit their exposure, companies must conduct comprehensive investigations into current and potential customers and business partners, adapt to the changing regulatory environment quickly, and develop a comprehensive understanding of the risks particular to its business.

Recent incidents examined by FiveBy Solutions show the importance of enhanced and tailored due diligence approaches that require more extensive research and understanding of supply chains, Russia’s business environment, and contract terminology, as well as sanctions, export controls, and other restrictions imposed against Russia after its invasion.

The nature of a customer’s underlying business (specifically military or government-related work), type of service(s) or product(s) offered, and geographical presence pose additional export control evasion risks by Russian and Belarussian entities. Inadequate Know Your Customer (KYC) measures can lead to product diversion—a critical threat to a company’s reputation and bottom line.

Last year, a Reuters investigation found that the publicly traded US company Extreme Networks provided Russian missile manufacturer MMZ Avangard with more than $500,000 in “computer networking equipment for its office IT systems.” MMZ Avangard possibly obtained the equipment through a surrogate buyer, “a seemingly innocuous corporation near Moscow.” Extreme Networks’ management also dismissed compliance concerns about the sales raised by multiple employees. Management commitment, which is one of the pillars of an effective sanctions compliance program, would have helped the company avoid the resulting adverse media, reputational damage, and possible regulatory penalties.

  • Although Extreme Networks’ equipment was provided to MMZ Avangard through an intermediary, the company’s lack of concern about the end-user of its equipment undermined a major US foreign policy objective, damaged the company’s reputation, and possibly exposed it to fines or criminal prosecution. A more sophisticated analysis of the intermediary beyond a surface-level list check, including analysis of the company’s contracts and end-users, could have helped prevent these transactions.

The media this month reported that Haas Automation has sold machinery and components to Russian holding company Abamet, which is selling US technologies to Russian military entities. Although Abamet is not currently included on OFAC’s Specially Designated Nationals (SDN) list or the Entity List, it almost certainly will wind up restricted after being highlighted in media reports.

  • Haas denied the allegations, claiming that it stopped doing business with Russia in March 2022. But Haas also admitted that its components and machinery could have changed ownership without its knowledge, highlighting the importance of identifying the end-users of products and considering possible reputational damage should they wind up in restricted hands.

Transactions involving entities whose website or business registration states the entities work on “special purpose projects.”

Russian companies rarely list “special purpose projects” as their primary business activity, and this is a red flag that indicates an entity’s possible involvement in military/security activities. These entities often list other, seemingly innocuous activities as their lines of business on their websites, and some entities do not have a web presence at all—another red flag. Linguistic expertise and knowledge and understanding of Russian business culture can be critical in determining the level of risk these companies represent.

Aiburg JSC has minimal web presence, but an in-depth investigation by FiveBy found that the entity develops systems for drones and manned aircraft. These activities on their own might not necessitate evasion of export controls, and Aiburg is not included on the Entity List or the SDN list. These, however, are dual-use technologies, and additional research found that the entity has worked on testing and documenting software for military unmanned aerial systems (UAS) control systems. An entity such as Aiburg JSC needs to be treated with extra caution and the end-users for US-origin technologies sold to Aiburg JSC need to be closely examined to avoid the risk of running afoul of export control restrictions.

Transactions involving companies that are physically co-located with or have shared ownership with an entity on the BIS Entity List or the Treasury Department’s SDN List.

Russia-based PNPPK-Kvantek LLC is not on the BIS Entity List or subject to OFAC sanctions, but it is registered at same address as its largest shareholder, BIS-listed Perm Scientific-Industrial Instrument-Making Company PJSC. PNPPK-Kvantek LLC’s main “official” activity is production of communication devices and manufacture of electronics and software. Its BIS-listed parent produces navigation, meteorological, geodetic, geophysical, and similar instruments, apparatus, and instruments for Russian military and intelligence agencies.

  • PNPPK-Kvantek presented Perm products at Army-2019, Russia’s high-profile, annual military expo demonstrating new military technology developments. Although PNPPK-Kvantek does not appear on any sanctions lists, expert analysis indicates that the company is directly linked with its parent and could potentially divert US origin technologies to the restricted shareholder with which it shares an address.

Conclusion

Russia’s resolve to continue fighting in Ukraine and its dependence on western technologies for its military hardware indicates that Russian entities will continue developing new and more complex methodologies to evade export controls and financial restrictions. US firms must enhance their compliance measures, given regulators’ more aggressive approach to sanctions and export control violations aimed at preventing Russia from gaining access to prohibited US-origin technologies. Inadequate compliance programs will almost certainly result in severe fines, criminal charges, and negative media exposure.

FiveBy’s expert, certified analysts can help companies navigate the increasingly complex regulatory and evasion environment as Russia’s war in Ukraine rages on. In-depth analysis can help mitigate the increased risks for both US and non-US companies, and jurisdictional expertise will almost certainly help expose higher-risk customers and business partners, examine complex supply chains, and help strengthen controls.

FiveBy is a specialized risk intelligence consultancy with unique expertise in compliance and fraud management. Companies and organizations contact FiveBy when they see risks that could affect their reputation and regulatory risk, their ability to support customers, their intellectual property, or their bottom line. FiveBy provides unique insight and experience to transform these risks into opportunities. Our tech and business savvy, our certified compliance experts, and our proven track record, means you can rely on us to address those vulnerabilities, enabling you to focus on your day-to-day business. Whether you work with FiveBy on an assessment, to address a one-off incident, or to create robust processes to address future risks – we’ll always be in your corner. We stay ahead of the game, so you don’t have to.

FiveBy experts provide insights on news, industry trends, and possible regulatory and reputational risks around the corner.

FiveBy Director of Risk Intelligence, Irene Kenyon, on 27 February 2023 once again appeared on New Paradigms, discussing the one-year anniversary of Russia’s invasion of Ukraine and the state of the unprecedented sanctions imposed on Russia.

What has changed?

How has compliance changed?

How much more complicated will compliance teams’ jobs be with sanctions and restrictions on Russia growing?

Have sanctions against Russia been effective?

Watch the video below and contact FiveBy’s experts to get a free consultation and access in-depth analysis to help avoid regulatory, criminal, and reputational risk.

FiveBy IntelSentry

At a time when the regulatory landscape is changing at a lightning speed, with new financial sanctions programs, enforcement actions, and global policy developments stretching compliance programs, effective monitoring and mitigating risk is more important than ever for global banks, financial institutions, technology firms, cryptocurrency platforms, and governments.

That’s why FiveBy Solutions—a specialized risk intelligence consultancy with unique expertise in financial crime-related risk and fraud management—is teaming up with The Illicit Edge, the foremost source of breaking financial crime news at the intersection of sanctions, money laundering, corruption, terrorist financing, cyber and cryptocrime, and more.

While The Illicit Edge surfaces the latest and most important sanctions and financial crime news and information that compliance and risk professionals need to stay abreast of the everchanging regulatory risk landscape, FiveBy provides US and international firms and financial institutions with customized risk assessments to make sense of the reams of information generated by their compliance tools and inform their compliance risk management decisions.

We are proud to be working with The Illicit Edge as we strive to bring our clients the best and most-informed solutions that position them for success.

Click below for a free consultation and demo of FiveBy’s Risk Assessment Services.

RISK ASSESSMENT SERVICES

FiveBy experts provide insights on news, industry trends, and possible regulatory and reputational risks around the corner.

FiveBy Director of Risk Intelligence, Irene Kenyon, on 5 September 2022 participated in New Paradigms—a show that asked the question: Are sanctions still relevant in a multipolar world?

The answer is nuanced. Sanctions are effective foreign policy when done intelligently. They work when goals are specific, and the implementation and enforcement strategies are focused and multilateral. In coordination with our partners and allies, sanctions are most effective against illicit actors and states.

Irene also states that sanctions compliance in our volatile environment is getting more complicated and expensive, especially since the sanctions against Russia are of primary importance to the current administration. However, the best compliance solutions don’t have to be expensive, especially given the managed services cost. A mix of automation and human-driven analysis to interpret what is sometimes vast reams of data is the best option to implement a robust compliance program.

For our bespoke Risk Assessment Services that supplement data from automated sources, click below.

RISK ASSESSMENT SERVICES

 

FiveBy experts are often asked to provide insights on risk-related news, industry trends, and other sanctions and money-laundering issues.

Irene Kenyon, FiveBy Director of Risk Intelligence, was recently quoted in an article by the Organized Crime and Corruption Reporting Project (OCCRP) on the network of proxies and middlemen that are used to obscure involvement in Syrian phosphate imports into Europe.

Security firms linked to sanctioned war profiteers and senior figures from sanctioned Russian oligarch, Gennady Timchenko’s, Stroytransgaz benefit from the trade. Stroytransgaz denies its companies were connected, but OCCRP and its partners found evidence of several links between Stroytransgaz and these firms.

Kenyon commented on blood money that is generated from the Syrian phosphate trade is likely going into the pockets of designated, corrupt kleptocrats and that using shell companies is a common strategy to disguise the fact that sanctioned entities or individuals were benefiting from a trade.

An abbreviated version of the story was also published by the Guardian.

To access FiveBy expertise on sanctions, money laundering, and other risks that can impact your business, please click below.

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FiveBy is proud to announce a new partnership with Microsoft, which combines managed service offerings with the power of Microsoft Dynamics 365 Fraud Protection. Organizations across many industries are experiencing an increase in fraud incidents at speeds that impact revenue with little warning and often require unplanned resources to respond.  According to 451 Research, for merchants that have seen fraud volumes increase, 41% cited growth in new account fraud, while 35% cited a spike in policy abuse and friendly fraud. *

FiveBy’s fraud management expertise coupled with Microsoft’s adaptive AI technology offers customers a comprehensive solution to defend against the continuous threat of fraud related attacks while improving accuracy and acceptance rates. This collaboration enables organizations to identify and reduce fraud costs, while freeing up key resources to focus on investments, innovation, and growth.

Dynamics 365 Fraud Protection’s ability to continuously learn evolving fraud patterns enables customers to detect and protect against fraud trends and loss issues faster and with more accuracy, while providing a holistic view of the fraud landscape. Dynamics 365 Fraud Protection delivers three key capabilities integrated as part of an overall solution or provided individually as needed:

  • Purchase protection that rejects fraudulent transactions while more accurately accepting legitimate purchases, maintaining and even improving revenue and customer satisfaction
  • Account protection to fight against account takeovers, fake account creation and user account abuse
  • And loss prevention that enables organizations to identify anomalies that can indicate fraud trends in off-line behavior or for batch analysis

“As long-time specialists in this field, FiveBy has not come across a fraud detection and insights solution nearly as robust and accurate as Microsoft’s fraud protection tool. We are thrilled to be able to offer our customers an opportunity to get ahead of ever-changing fraud trends at a speed and operational efficiency that hasn’t been available until now.” -Alex Kochis, President & Founder of FiveBy

FiveBy’s team of experts, including credentialed fraud investigative analysts and data scientists, provide dedicated customer support from the initial evaluation and implementation of Microsoft Dynamics 365 Fraud Protection to the ongoing management and optimization. For what once required customers to manually search for trends and anomalies that might indicate a fraud incident, FiveBy can now analyze small batch data sets for labeling (flagging fraud related transactions) that feed into the Dynamics 365 Fraud Protection AI modeling to be automated. Additionally, FiveBy will assess customers’ current fraud mitigation processes, tools, workflows, and decision matrices.

“Fraudsters are sophisticated and continually seek vulnerabilities to exploit. However, most of our customers are not fraud experts, nor are they staffed with large teams of skilled fraud analysts and investigators. Therefore, we are working with FiveBy Solutions to deliver a comprehensive solution that enables our customers to stay ahead in the race against fraudsters.” – Donald Kossmann, Distinguished Engineer & General Manager, Microsoft Dynamics 365 Fraud Protection.

While identifying anomalies, trends, and key insights are a basic need in this fast-paced market, organizations still need to act, leveraging the intelligence gathered. In addition to fine-tuning data to be ingested into the Dynamics 365 Fraud Protection AI modeling and adjusting parameter and rules configurations, FiveBy’s specialists can provide ongoing assessments and recommendations to improve data and policy health, or even implement improvements directly with customer teams to close vulnerable gaps that can be easily exploited.

* Fraud-prevention upgrades come into focus, 451 Research, S&P Global Market Intelligence, February 8, 2022

About FiveBy Solutions

FiveBy Solutions is a specialized risk intelligence consultancy with unique expertise in risk and fraud management. Companies and organizations contact FiveBy when they see risks related to fraud, abuse or compliance that could affect their reputation, their ability to support customers, their intellectual property, or their bottom line. FiveBy provides unique insight and experience to transform these risks into opportunities. Whether you work with FiveBy on an assessment, to address a one-off incident, or to create robust processes to address future risks – we’ll always be in your corner. We stay ahead of the game, so you don’t have to.

More information: www.fiveby.com

Press inquiries: John Solheim – FiveBy

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FiveBy experts are often asked to provide insights on risk-related news, industry trends, and other sanctions and money-laundering issues.

Irene Kenyon, FiveBy Director of Risk Intelligence, recently participated in a free webinar with Thomson Reuters on how US firms and financial institutions can best adjust to the volatile sanctions environment caused by Russia’s invasion of Ukraine.

Topics in this hour-long webinar include strategies to protect companies from regulatory risk, given the rapidly changing sanctions environment, with new designations being released almost on a daily basis, reputational risk, de-risking, and transparency that makes tracking illicit assets much less challenging.

Best advice 

Companies must examine their own risk appetites. What are their red lines? Are they willing to do business in Russia at all, given the sanctions  risks?

And if companies feel they cannot completely disengage from Russia, they must watch the regulatory and legislative developments and do proactive assessments about businesses that may be at risk of being sanctioned, about entities that may have connections with Russian oligarchs  who may be in danger of being designated, and know how much being involved with Russia will impact their reputations in the ESG sphere, which is becoming more and more critical for both clients and investors.

Courtesy of Thomson Reuters

FiveBy experts are often asked to provide insights on risk-related news, industry trends, and other sanctions and money-laundering issues.

Thomson Reuters recently published FiveBy’s advisory on strategic corruption written by FiveBy Risk Intelligence analyst Marren Haneberg in a two-part series that explores how US firms and financial institutions can adjust, as US regulators look to enhance the country’s battle against strategic corruption.

The first part explores the meaning of strategic corruption and why the US government considers the issue a threat to our national security.

Oligarchs, especially those from Russia and Ukraine, are making real estate and other large asset purchases to evade sanctions, launder money through US and other western financial systems, and influence politicians. Corrupt regimes also exploit state-owned companies to influence foreign politics.

In the second part, Marren examines how US companies can stay ahead of the curve and be proactive in their efforts to address this national security threat.

Companies engaged in [vulnerable] sectors should reassess their risk programs, possibly perform transaction monitoring, track changes in employment for clients — especially those in risky jurisdictions or who raise other red flags. Companies also should keep abreast of possible upcoming regulatory changes mandated by the Corporate Transparency Act, given the Biden administration’s commitment to treating corruption as a national security concern.

US firms and financial institutions concerned about transacting with possible kleptocrats and corrupt government officials, especially as the West ramps up sanctions against Russian oligarchs, should engage the support of expert analysts at FiveBy to develop most effective strategies to protect their business from regulatory and reputational risk.

Need more information? Visit www.fiveby.com or contact us at info@fiveby.com.