Managing risks created by Russia’s invasion of Ukraine: Enhanced due diligence and advanced know-your-customer policies
The report examines how Russia continues to source Western components for military use through sanctions circumvention. It highlights legal, regulatory and reputational risks for businesses linked to such supply chains. Firms are expected to strengthen human rights due diligence and KYC processes to avoid contributing to violations of international law.
Recommendations
Companies should invest in stronger internal controls and allocate resources to enhance supply chain and customer due diligence. Risk matrices must be updated to reflect emerging transhipment hubs, with stricter onboarding checks for suppliers in high-risk regions.
Firms are advised to assess customer policies to prevent re-exports for military use and identify red flags linked to front companies. Collaboration with civil society and governments is encouraged to improve monitoring and disrupt illicit networks. Mechanisms for rapid investigation and response to misuse of products are also recommended.
Red flags in a post-February 2022 world
The report identifies common indicators of front companies used to bypass sanctions. These include recent registration after February 2022, especially in jurisdictions with weak export controls or known transhipment links to Russia.
Other warning signs include low share capital despite large transactions, lack of physical offices, shared addresses with other entities, and opaque ownership structures. The presence of nominal directors, links to Russian officials, or prior relationships with Russian military-affiliated entities also signal risk.
Additional indicators include Russian-language websites, domains linked to Russian entities, and evidence of shipping dual-use goods to Russia after the invasion despite no prior history. These patterns suggest deliberate obfuscation of end-users and supply chains.
Tools
The report outlines analytical tools that support enhanced due diligence. Platforms such as Refinitiv enable risk and compliance analysis by identifying high-risk entities and hidden relationships within supply chains.
Sayari Analytics provides visibility into beneficial ownership and corporate networks, helping firms detect links to sanctioned or illicit actors. These tools support mapping of financial and commercial relationships, improving identification of diversion risks and strengthening compliance frameworks.
