Primer: Compliance for Russia Diversion/Circumvention Risks

Since the Russian invasion of Ukraine in February 2022, the United States, European Union, and United Kingdom have deployed an unprecedented framework of export controls designed to degrade Russia’s military-industrial capacity. Several years on, these governments have shifted from adoption to implementation to enforcement, focusing on the risk of diversion of export-controlled goods to Russia. Enforcement risk is particularly acute in Europe.

Companies with a global footprint must adapt their compliance operations to the potential liabilities of diversion and circumvention and increased enforcement. This requires an advanced level of due diligence.

TradeSecure has compiled a list of high-risk technologies and harmonized red flags from the relevant government guidance to help firms better understand where diversion risk management should focus.

What technologies should you be concerned about?

Allied governments have coordinated their enforcement efforts around items on the Common High Priority List (CHPL). The CHPL is a jointly-maintained list of 50+ Harmonized System codes for sensitive items shared across the U.S., EU, and UK. The CHPL was populated according to components recovered from Russian weapons systems and military equipment on the battlefield in Ukraine.

Figure 1. Tiers of Items within the CHPL (BIS)

The four tiers of the CHPL, in descending order of concern, are:

Tier 1 – Integrated Circuits: Microchips, semiconductors, processors. (This is the highest-priority category, and targets items Russia cannot produce domestically.)
Tier 2 – Advanced Electronics: Wireless communication modules, satellite navigation (GNSS), tantalum and multilayer ceramic capacitors.
Tier 3 – Weapons System Components: Connectors, digital cameras, ball bearings, optical devices, navigational instruments.
Tier 4 – Manufacturing Equipment: Printed Circuit Board (PCB) production equipment and Computer Numerical Control (CNC) machine tools for high-precision metal fabrication.

The CHPL is a living document, updated continuously as new battlefield evidence emerges and is disseminated across allied enforcement agencies to ensure a unified export control response.

Comparison of Red Flag Guidance Between Jurisdictions

Consolidated from European Union/G7, U.S. Tri-Seal, and UK Office of Financial Sanctions Implementation (OFSI) guidance, the following red flags represent the highest-probability indicators of sanctions evasion.

Any single flag warrants heightened scrutiny. Multiple flags in a single transaction should be treated as a potential diversion attempt. While there are some minor differences between red flag guidance between jurisdictions, TradeSecure recommends monitoring for all ten red flags below.

Geographic Risk Analysis

Not all countries carry equal risk. Exporters must apply heightened scrutiny to any shipment of CHPL-listed goods destined for the countries below, regardless of the stated end-use. Note that states bordering Russia carry the highest-risk due to overland transit and transshipment.

Figure 2. TradeSecure Analysis of Risk-Levels of Countries for Diversion^[1]

The map above illustrates the common illicit procurement channels used to funnel restricted technology and goods from Western manufacturers to the Russian military-industrial base.

A Tiered Approach to Risk Management for Russian Diversion

For companies with a global footprint, the current regulatory environment demands a tiered understanding of geographic risk. While the U.S. and the UK have ramped up prosecutions, failure to combat Russian diversion carries a particular risk of enforcement by the European Union. This is because the EU has recently expanded exporter liability and strengthened due diligence requirements to target intentional evasion with the adoption of its “anti-circumvention tool”.

The highest geographic diversion risk is concentrated in neighboring states to Russia, particularly Kazakhstan, Kyrgyzstan, and Belarus, which function as critical nodes in Russia’s sanctions-evasion architecture. Unlike other diversion hubs that rely primarily on opaque intermediaries, third-country rerouting, or lack of compliance protocols, these jurisdictions have geographic proximity to and longstanding economic integration with Russia.

Kazakhstan and Kyrgyzstan are both members of the Eurasian Economic Union (EAEU), a borderless customs union with Russia and Belarus that significantly reduces customs investigations for intra-bloc trade. This arrangement has created a “Eurasian backdoor” through which Western-origin electronics, semiconductors, and other CHPL-listed goods can be imported under civilian classifications and subsequently re-exported to Russia through legal or semi-legal trade channels with limited customs intervention. This, in turn, has attracted increased regulatory scrutiny from the European Union.

In a major escalation of diversion enforcement, Kyrgyzstan became the first country added to Annex XXXIII of Regulation 833/2014 via the EU’s 20^th package of sanctions in April 2026, thus activating the EU’s anti-circumvention tool. The EU felt a designation to Annex XXXIII was warranted as authorities cited Kyrgyzstan’s “systematic and persistent failure” to prevent re-export of restricted goods to Russia. EU authorities specifically identified significant increases in imports of CNC machine tools and telecommunications equipment into Kyrgyzstan, with evidence linking these goods to end-uses in Russian drone and missile manufacturing.

Kazakhstan has similarly emerged as a strategic procurement platform for Russia’s military-industrial complex. Since 2022, exports of high-priority electronics, UAV components, and integrated circuits from Kazakhstan to Russia have surged dramatically. Russian-linked entities frequently establish newly incorporated local companies or intermediary LLC structures in Kazakhstan to source Western drones, microelectronics, and communications equipment for downstream transfer into Russia.

As Russia’s closest military and economic partner, Belarus remains highly exposed to sanctions circumvention activity through overland logistics, military purchasing networks, and parallel trade flows. In response, the European Union’s 20th sanctions package against Russia included parallel penalties on Belarus, reducing its utility as an alternate procurement route for restricted goods.

Other key circumvention hubs, including Armenia, Uzbekistan, Turkey, China, and the UAE, pose a high and concentrated risk of rerouting through professional evasion networks. These states are often targeted by Russian intelligence to set up front and shell companies that purchase Western goods and re-export them to Russia for profit. Exporters face high liability when shipping to these regions if they fail to recognize potential “red flags” of sanctions evasion.

Producer countries of critical electronics, specifically Thailand and Malaysia, are often used as intermediary transit points to move high-priority items, such as computer chips and AI technology. These are often originally listed as destined for other Asian markets like China. Taiwan also remains cited as a geographic diversion risk due to its unrivaled role as the global producer of Tier-1 microelectronics.

Because other countries on the TradeSecure risk map Watch List (like South Africa, Serbia, and Brazil) are often viewed with lessened scrutiny by compliance teams, they may often not trigger in screening software designed to detect automated red flags. This lack of oversight, in turn, creates the blind spots necessary for Russian procurement networks to actively exploit to move restricted technology, making them particularly appealing circumvention hubs. The increasing use of authorized reseller subsidiaries in these countries has also proven successful, as local branches are less likely to conduct rigorous customer due diligence. For Russia, watch list countries are the paths of least resistance towards the acquisition of CHPL items.

Enforcement for Diversion/Circumvention Is Growing

Enforcement on the Western side is escalating in response. The European Union’s enforcement is at the highest levels ever. The U.S. Department of Justice and its National Security Division are actively pursuing criminal cases against both U.S. citizens and foreign nationals involved in international diversion schemes. Participation in facilitating circumvention, even indirectly, is now a criminal offense in multiple jurisdictions and can result in hefty monetary fines. This is demonstrated by the February 2026 sentencing of Eleview International Inc., which was fined $125K for the illegal export of US technology to Russia, and EFG International AG, which was ordered to pay $3.7M in 2024 for violating multiple sanctions programs involving a designated Russian individual.

Recommendations for Managing Russia Diversion Risk

Implement Enhanced Due Diligence as your baseline for all transactions involving CHPL-adjacent products.
Cross-reference buyers against the US Consolidated Screening List, OFAC Specially Designated Nationals (SDN) List, EU Consolidated Sanctions List, and the UK Sanctions List.
Verify the physical infrastructure of counterparties and conduct periodic site visits for high-risk accounts.
Add explicit “No Re-export to Russia” clauses and zero-tolerance policies in all distributor agreements, regardless of geography.
Set higher risk thresholds for CHPL-related transactions in Elevated Risk and Watch List countries to account for the relatively lower risk associations in screening software for under-the-radar areas of Russia circumvention.

Conclusions

Russia diversion and circumvention operations have grown in sophistication as the War in Ukraine has continued. Compliance programs should adapt to counter new tactics.

By monitoring technologies on the CHPL and updating your risk frameworks for the variety of countries targeted by Russia for diversion operations, your firm can be better prepared to manage these risks. Overland circumvention risks are highest for countries bordering Russia. More sophisticated Russian circumvention schemes target more geographically distant jurisdictions, but which have elevated trade in advanced technologies.

As the European Union, and to a lesser extent, the United States and the United Kingdom, enhance enforcement, anti-circumvention scrutiny from authorities will continue to generate risk for firms transacting in CPHL items. In the current environment, knowing your customer is not a formality – it is your primary legal defense.

^[1] Country risk classifications reflect TradeSecure’s independent assessment, derived from open-source intelligence and publicly available regulatory guidance. These designations are not issued by any government authority and do not constitute official sanctions designations.