How Russia bypasses sanctions: a false transit scheme worth billions of dollars in Western goods

Western companies continue to unknowingly supply Russia with goods worth billions of dollars, despite the sanctions in place. This is due to a clever false transit scheme used by Russian importers. The essence of the scheme is that goods officially intended for Central Asian countries or China actually remain in Russia, thanks to changes in documents at the borders of the European Union.
This was reported by the editors of Important Stories.

 

How does the false transit scheme work?

The basic mechanism is that goods, crossing the EU border, are registered as sent, for example, to Kazakhstan or Uzbekistan. However, along the way, the delivery location changes: carriers, according to sources, literally cross out the originally indicated destination and indicate Russian cities such as Moscow or St. Petersburg. These changes in documents allow Russian companies to receive goods directly from Europe via Belarus, Latvia, Estonia or Finland. An example is the major Russian microelectronics supplier Kvazar, which has been under US sanctions since May 2023. However, the company continues to receive goods, including components from US firms Texas Instruments and Analog Devices, using a false transit scheme. These components are first sent to China or Hong Kong, but ultimately enter Russia via Sheremetyevo.

A significant portion of the goods that enter Russia fall into the category of sanctioned products. These are dual-use goods that can be used for both civilian and military purposes. Such goods include electronics, microchips, industrial components, and software. Most of the sanctioned products are supplied from the EU and the US, and despite strict restrictions, they continue to enter Russia thanks to the false transit scheme and insufficient border controls.

According to research, goods worth about $5 billion intended for Central Asian countries actually ended up in Russia in 2023. This is about a third of the total volume of goods sent to this region. For example, Finland sent a batch of microchips to Kazakhstan, but data shows that a significant portion of these goods ended up on the Russian market. A similar situation is observed with goods shipped via Belarus.

 

How Russia continues to bypass sanctions

Russian companies actively take advantage of legal loopholes and insufficient border controls. One way to bypass sanctions is to use third countries, such as Kazakhstan, Uzbekistan, Kyrgyzstan and Turkey, through which sanctioned goods enter Russia. These countries often do not have strict transit controls, and Western companies may not know that their products will end up in Russia.

In addition, Russian importers use fake transit documents to claim that goods are being sent to countries friendly to Russia. For example, a shipment may travel from Germany to Kazakhstan via Russia, but at the Russian border the goods are unloaded and enter the domestic market. At the same time, the documents indicate that the goods allegedly passed through the whole of Russia in transit.

 

Why is it so difficult to combat this?

Western countries are trying to tighten controls on exports to Russia, but they are facing a number of problems. Firstly, in the countries through which goods are transited, controls are often weak or non-existent. Secondly, international logistics are very complex, and it is extremely difficult to track each shipment along the entire route from Europe to Russia. Especially when it comes to multiple border crossings and changes in routes.

In addition, some Western companies are genuinely unaware that their goods are ultimately ending up in Russia. Often, they sell their products through intermediaries who work with third countries, while the real routes and final recipients remain hidden behind chains of contracts and forged documents.

Thus, despite repeated attempts by the international community to block the supply of goods to Russia, the false transit scheme remains an effective tool for bypassing sanctions. Russian companies continue to receive critical goods, including products needed for the military and technology industries, and Western companies find themselves unwitting participants in this process.

This situation is of great concern to Western countries, as the lack of effective control over transit and circumvention of sanctions undermines their efforts to put pressure on Russia. As a result, Russia continues to receive key technologies necessary to support its economy and military potential. It also harms international trade, creating an unequal playing field for those companies that strictly comply with sanctions and do not participate in such schemes. Obviously, to combat false transit more effectively, coordination between all countries involved in transport chains is necessary, as well as increased control at borders. However, at the moment, the situation remains complex and requires new approaches to solving this problem.