10 ways to circumvent the sanctions that Russians resort to

The most popular schemes that Russian companies use to circumvent sanctions.

The issue of sanctions has rightly become the number two issue, immediately after weapons and hostilities, for diplomats, politicians, lawyers, economists and, finally, for society.
The unprecedented number of sanctions imposed by the democratic world on Russia has a concrete impact on the economy and the course of the war. As in the war, the topic of sanctions has its offensive, withdrawal, there are detours.
We will dwell on the maneuvers of circumvention [circumvention of sanctions] resorted to by the Russians. This includes oil sales schemes, "ticket tours", saving the oligarchs' own property, and "banned" trade through intermediaries - below we write about all the main schemes.
The goal is simple: to do what is forbidden, to minimize the destructive impact of sanctions. It must be acknowledged that circumventing sanctions cannot be done alone - there are always partners, sometimes even in democratic societies.

It is all the more interesting to find such ways, prevent them and keep up the pressure with new sanctions, as the Ermak-McFaul group is doing.

1. "Latvian-Turkmen mixture of oil and tankers without destination"; "Mongolian mixture" of coal.
Research says that Russian oil mixes with others, turning it into mixtures - "Latvian mixture" and "Turkmen mixture". For example, 49.99 percent of oil is from Russia, and 50.01 percent is oil of other origins.
So, technically, oil in this way no longer has Russian origins. The trade itself took place from the Russian Littoral to Ventspils, the Latvian port, where the product was "mixed".
Western companies often violate sanctions. How are they helping Russia get around them?
Since the invasion of Ukraine, 11 million barrels of Russian oil have been sold in the "Latvian mix" alone. Shell later apologized for the scheme and promised to stop buying this oil.
Mongolia has begun exporting much more coal through Russian ports in the Far East. At the same time, neither the discovery nor the development of new coal deposits in Mongolia was announced, so everyone decided that this was a worthy response to the "Latvian mixture" - "Mongolian coal".

Also, only other documents on oil can be made, a trick known since the sanctions against Iraq, it can be transferred to another tanker on the high seas (North Korea's trick. Then with that "tankers without a destination" - tankers without a planned destination on the route where more than 11.1 million barrels were loaded, which is more than in any other country.
It is proposed that some of these schemes be closed by the sixth package of EU sanctions, but Russia is now increasing its own fleet of tankers.

2. Trade through intermediaries (re-export of goods), new trade partners
It allows the import of prohibited goods. How do you do that? For example, sanctions prohibit the delivery of certain equipment from Germany. Two agreements will be signed, between the Russian-Turkish company and the other between the Turkish-Russian one.
The Turks buy banned equipment and then send it to the Russians via Turkey or Azerbaijan. Original goods are imported from the United States and Europe and through Kazakhstan.
At the same time, European manufacturers know in advance to whom and where they sell their products. Of course, this scheme in variations is reproduced in other cases. The United Arab Emirates has become a powerful "partner", especially because of the convenience of moving business there.

There, as in Turkey, you can get a residence permit by buying real estate, which opens the way for the establishment of a legal company.
Reuters claims that the number of requests from Russians to buy real estate in the UAE has increased tenfold. However, EU exports to Russia fell by 55 percent, at least officially.

3. Automatic re-issuance of Visa and Mastercard cards in the "Peace" system and bank cards in the surrounding countries
After the departure of international payment systems, Russians began to turn en masse to banks in Kazakhstan and neighboring countries to issue them personal bank cards in their name for payments around the world.
Dozens of companies that offer "absolutely official" bank card issuance services in another country have appeared on the Internet. However, in mid-May 2022, all Kazakh banks stopped issuing bank cards to Russians.
Even if a Russian comes to Kazakhstan on his own and gets a TIN and buys a local SIM card, there is a 99 percent chance that he will be denied such a service.
This is due to the reluctance of banks to fall under sanctions. Now the Russians have started traveling to Minsk to get Visa and MasterCard cards from Belarusian banks. You cannot pay for them on Russian platforms and in Russian stores, but with their help, Russians will be able to pay for foreign services and subscriptions in the App Store and Google Play.
Most likely this "card tourism" will continue: Uzbekistan, Switzerland, online banks (who said Tinkoff?)

Russian banks will automatically reissue expired Visa and Mastercard in the MIR payment system.
Customers will not even have to go to the bank, for example, Tinkoff will bring you a card by courier service, and the cards will work in Russia, Turkey, Vietnam ... Some banks give all their Visa and Mastercard cards indefinitely so there is no need to re- by issuing.
It is said that the cards can be used until the plastic wears out. Interestingly, the reason for the expansion of the cards is the lack of plastic and card chips. In fact, this is a circumvention of sanctions.

4. Parallel import: import of goods without the permission of the owner TM
Earlier, the legislation of the Russian Federation prohibited the import of goods that were sent for sale on the market of another country, without the consent of the owner of the trademark contained in those goods.
However, the new state document allows the import of goods intended for sale on another market without the consent of the copyright holder. These goods include cars, technology, metals, drugs and clothing.

Accordingly, you can buy Tesla cars, for example, in Kazakhstan, and then sell them in Russia, eliminating the problem of violating the rights of right holders.

5. Purchase of individual electronic components for further mass assembly of prohibited goods
Instead of ready-made electronics, they are trying to buy components for further assembly. The sale of server and network equipment with American technology to Russia is prohibited.
Manufacturers in China can only supply individual parts, such as memory modules and motherboards, although it is more cost-effective to sell finished products.
Lenovo, Huawei and ZTE can act as suppliers of the necessary spare parts and electronics. All ready-made solutions of Chinese manufacturers of user, server and infrastructure equipment in one way or another contain American intellectual property.
In this situation, the equipment is subject to secondary sanctions. But it is possible to buy some components from China that are not subject to restrictions.

6. Alternative payment systems

Visa, Master, JCB, Pay Pal refused to work with Russian companies. Yes, there are exclusions of several banks with SWIFT.
However, despite that, there are less difficulties than a complete ban on payment. There are still payment systems on the market that enable international transactions: MIR is a well-known system in Russia that has existed since 2015. The list of countries of interaction is limited.
UnionPay is a Chinese payment system that has been operating since 2008. It is represented in 180 countries.
Some Russian banks plan to issue Mir-UnionPay cards. The Golden Crown is a money transfer system with the European subsidiary KoronaPay, although it is limited to a maximum transfer amount of $ 5,000. Contact, Skrill and Unestream services enable the transfer of money abroad.
At the same time, secondary sanctions work effectively with payment systems. For example, such US sanctions against Transcapitalbank (TCB) have destroyed payment routes between Asian countries in international trade.
The bank came under sanctions on April 20 because it "offered the services of several banks in Asia, including China and the Middle East, in order to circumvent international sanctions."
TKB offered its clients the opportunity to perform transactions through its own internet banking system, known as TKB Business, an alternative communication channel for SWIFT. Of course, payments in cryptocurrencies and Havala work.

7. Re-establish "bilateral" companies such as new airlines in Turkey

Turkey has created airlines that will serve only Russians, so that Russia and Turkey can bypass EU and US sanctions and renew tourism in the country.
The newly created companies will only fly to Russia, so they will avoid risks. You can come to Europe and back from the EU to Russia via Serbia (Airserbia), Turkey (Istanbul), UAE (Dubai or Abu Dhabi) or Armenia, Azerbaijan, Georgia or Kazakhstan.
We can bet that “special” airlines are just one example of circumventing sanctions.
8. Foreign companies open accounts in rubles for gas payments
The European Commission said opening an account in rubles to pay for gas would violate sanctions. Immediately after that, the Italian Eni announced the opening of an account in rubles with Gazprombank, in order to fulfill Russia's requests for the sale of gas.

Earlier, it was reported about dozens of companies that agreed to pay Russia in rubles. In essence, this is both circumvention of sanctions and breach of contract.

9. Bypassing corporate structures and liquidation of companies
In general, it is a banal corporate restructuring of business with a simple goal: to remove individuals or legal entities from sanctions. Movement in the cycle: received sanctions - restructured - left - won again.
For example, the Swiss are actively helping to restructure the company and thus hide the ultimate real owner.
The sanctions were recently lifted by the Russian chemical company Eurochem after billionaire Andrei Melnichenko ceased to be its owner, and is now owned by his wife.
It is also interesting to come up with something valuable: usually an individual's property depends on the company or trust, where the person is sanctioned in one way or another. Freezing assets means not being able to use them, which is sad in itself.
What's worse, keeping a property costs money - what if everything is frozen? Answer: put the company in liquidation. The correct liquidator has the right to allocate funds for the maintenance of the property. In essence, the key task is to keep the price of assets from falling.

10. Tricks of the service from lawyers and counseling on "how to circumvent sanctions"
Exclusive sources at leading law firms in London and New York confirm that there has been a wave of inquiries from Russians (and Russian business) about "how to circumvent sanctions" or at least "how to live with sanctions".
At the same time, either governments or regulators prohibit counseling on circumvention of sanctions. However, there are nuances, for example, the ban on consulting businesses with a sanctioned user is not so strict if the user changes.
There is a direct ban on lawyers taking money for such consultations, as well as guidelines, but here's what the lawyers came up with: advising "pro bono" and only then a bill for random services.
Another option for this type of advice is "my friend": a company that, by coincidence, is an exact copy of the structure and business of the company of the sanctioned owner - simply belongs to another person, who is not sanctioned. And the advice of a lawyer applies in the same way to an actual sanctioned client.
Traditionally, efforts to prevent sanctions circumvention counseling are welcome, but calls for truly effective bans and criminalization of sanctions circumvention should be encouraged.

Sanctions work a step forward - a step aside - a step back, and again. Which means only one thing: more sanctions are needed!