UK-Russia trade patterns suggest illicit flows, study finds
‘Since the end of 2022, the UK has run a trade surplus with the Russian Federation for the first time in decades,’ while investigators have uncovered patterns suggesting sanctions evasion through complex networks, according to a Transparency International (‘TI’) report released 19 November.
Investigators identified British limited partnerships facilitating over 17,000 imports to Russia, with more than 3,200 shipments containing items flagged as ‘High Priority’ battlefield components and potential dual-use goods.
‘British ports are still actively used by Russian buyers as a point of departure for cargo, including for those Russian firms subsequently subject to sanctions restrictions,’ the researchers noted.
The report documented specific cases including a £1.2 million shipment of IBM digital-processing units from Scotland to Russian firm Vneshekostil, which was sanctioned by the US Treasury six months later. Aircraft parts were also found moving from multiple UK locations to Russia via Saudi Arabia, Kyrgyzstan and the United Arab Emirates (‘UAE’).
‘Firms with mass registrars and officers addresses in London and Edinburgh are also used for trade deliveries to Russia. At the same time, the firms have among their general and limited partners persons involved in previous money laundering schemes,’ the report stated.
‘In 2022-2023, we identified suspicious trade transactions by Russian firms through the British Overseas Territories, in particular the Cayman Islands and British Virgin Islands. These included both trade in marine vessels, high distillates, and dual-use commodities,’ the analysis noted.
‘Monolithic integrated circuits, electronic modules and antenna parts are actively imported into Russia through the British Virgin Islands,’ the report said.
Meanwhile, the Financial Times (‘FT’) reported that one British Virgin Islands-registered firm shipped about $350,000 worth of monolithic integrated circuits – described as critical military infrastructure components – to Russia last year. The newspaper’s own investigation found BVI-registered companies exported $134 million worth of goods to Russia in 2024 in apparent breach of UK sanctions.
‘We have convened ministers across government, launched a full review of enforcement, and have been supporting the Overseas Territories to investigate and act on any evidence of possible sanction breaches,’ said Stephen Doughty, UK minister for Overseas Territories, quoted by FT.
‘In the context of the current shrinking bottleneck situation for the UK-Russian economics relations, we suggest that intermediaries…can now operate in a one-stop shop: deliveries of dual-use goods, money laundering, and other illicit financial flows as well as ordinary economic activities,’ the TI report concluded.
