Russia seeks to evade export restrictions in many ways – Finland also a target

The impact of export restrictions is already visible in Russia, which is seeking to circumvent them using complex supply chains and third country intermediaries. The Finnish business community should also be aware of the risks.

A border bollard at Finnish and Russian eastern border.

The EU Member States and the USA have imposed exceptionally strong export restrictions on Russia due to the war of aggression that began in February 2022. The sanctions have led to a shortage of various materials and components that Russia needs to maintain its military capability.

Russia is applying increasingly diverse sanctions-busting efforts to make up for the growing shortage. Finnish businesses are also the targets of attempts to circumvent restrictions.

Russia is currently subject to a wide range of sanctions due to the war. These export bans include the products and technology that are used to maintain Russia’s military machinery and its manufacturing capacity. Besides these restrictions, the EU countries have imposed numerous other countermeasures against Russia, such as individual sanctions and import bans.

Operating conditions have changed in a material way

From the perspective of Supo, this phenomenon already began in 2014 when Russia annexed Crimea and war broke out in eastern Ukraine. The first wave of sanctions against Russia was imposed at this time. Due to its location, Finland has traditionally exported a great deal to Russia, and cross-border traffic has been busy. This has accordingly made Finland one of the countries through which Russia seeks to evade sanctions.

Operating conditions nevertheless changed substantially following the start of a large-scale war of aggression. The European Union and the USA have significantly tightened sanctions against Russia, leading to a fall in all exports to that country. Circumventing export restrictions via Finland has become more difficult, as efforts were previously made to send restricted products and technology as part of normal exports.

Russia is actively searching for new routes for its purchases. Its sanctions-busting efforts include disguising the true purchaser behind long supply chains and shipping through third countries. These procurement operations use both individual businesses and purchasing networks as channels of required technology into Russia. The purchases are not necessarily always clearly linked to Russia.

It is evident that the sanctions imposed by the Western community are already affecting Russia. The country is already experiencing a shortage of components required in the technology sector, and of parts needed in the shipbuilding and aerospace industries.

Even when Russia is able to procure certain products by evading export restrictions, the sanctions may also affect whether there are enough of them available and how much they cost. Russia cannot replace everything.

Finnish expertise is of interest to Russia

Finnish businesses and universities have a great deal of internationally recognised expertise and sophisticated technology. For example, various electronic components, measuring devices, machine tools, optics, maritime technology and quantum expertise are of interest to Russia.

Russia also seeks to acquire export-controlled dualuse products from Finland. Dual-use refers to technology or products that are suitable for both civilian and military applications, or for developing weapons of mass destruction.

Finnish businesses and universities should pay particular attention to unusual procurement efforts or contacts. The reputation and operations of an unwary Finnish organisation may be harmed if its technology or products end up in projects that support the Russian armed forces. The business itself may become a target of sanctions if it works with operators that are already subject to
Western sanctions.

One of the functions of Supo is to acquire information on efforts to send export-controlled technology or products from or through Finland to foreign countries. Supo also works to secure the operating conditions of Finnish businesses. Its export control work involves close national and international collaboration with various public authorities and businesses.

This work has been significantly facilitated by the new intelligence legislation that took effect in 2019. Supo is empowered to monitor activities that may jeopardise national security, even if they do not satisfy the essential elements of a criminal offence. This now enables an earlier start to the intelligence gathering process.