BIS Tightens Export Controls with An Eye on Russia Sanctions Evaders 

On the eve of Ukraine’s Independence Day, the U.S. Commerce Department’s Bureau of Industry and Security (BIS) announced new Russia sanctions and export control measures targeting the illicit procurement networks that are supplying Russia and Belarus with restricted items.  

Alan Estevez, Undersecretary of Commerce for Industry and Security, said of the new measures, “BIS has taken aggressive actions, in concert with our allies and partners, to impose strict export controls in response to Russia’s illegal, unprovoked, and full-scale invasion of Ukraine. Today’s action is an extension of this critical and ongoing work.” 

This wave of BIS export controls expands and builds upon previous measures working to cripple Russia’s military manufacturing capabilities. These new controls expand the scope of key rulings that enable export restrictions, limit access to U.S.-made goods and U.S.-branded goods, expand the BIS entity list, and offer guidance on maintaining trade compliance when developing contractual agreements. By making amendments to the Export Administration Regulations (EAR), the BIS aims to hinder Russia’s war efforts and support Ukraine’s sovereignty. 

Keep reading to learn more about the new round of sanctions and how they will affect many businesses with international partners. 

New Russia Sanctions and Amendments to EAR Expand Denied Parties Screening Lists 

Recently, the BIS imposed sweeping sanctions and export controls on entities and individuals both within and outside of Russia for aiding the evasion of trade restrictions and supporting Russia’s military economy. Changes were also made to the EAR, facilitating the implementation of these restrictions and expanding denied parties list by designating entities foreign to the targeted region. 45% of the new additions to the BIS Entity List were individuals, organizations, and locations outside of Russia.  

The latest BIS actions are multifaceted and focus specifically on ways Russia continues to fund and procure goods to continue its war in Ukraine. These updates reinforce an ongoing U.S. strategy to limit Russia’s acquisition of the technology and equipment its forces require, targeting networks involved in undermining global sanctions. 

Let’s break down the major categories of Russia sanctions and export control actions in the latest round. 

Tightening of Export Rules 

Two existing rules have been tightened to create additional export controls to limit Russia’s military equipment and technology procurement. The scope of the Expansion of Military End User (MEU) rule has been expanded to include additional entities in Russia and Belarus. 

Foreign Direct Product (FDP) rules have been updated with additional controls that impose additional license requirements on software for Computer Numerically Controlled (CNC) machine tools, which are often used in military manufacturing. 

BIS Entity List Additions  

A total of 123 new entities have been added to entity lists under 131 entries. These new entities focus more on parties outside of Russia and their roles in procurement networks. We can break down the new additions by country to better understand the new enforcement strategies: 

Many of the designated entities have been identified as providing U.S.-origin goods, electronics, and related items in violation of Russia sanctions. The Entity List imposes a license requirement for exports, reexports, or transfers to listed parties, with a presumption of denial for all items subject to the EAR, including non-sensitive items classified as EAR99 or typically shipped under No License Required (NLR).  

Targeting Shell Companies with ‘Address-Only’ Listings 

As part of the BIS’ efforts to clamp down on shell companies that are used to circumvent export controls, high-diversion risk addresses have been added to the Entity List as ‘address-only’ entries. This list targets addresses commonly used by shell companies who abet the violations of Russia sanctions and trade restrictions.  

Since multiple shell companies are known to use the same address, it is more effective to designate the address rather than identifying and listing frequently changing shell companies.  

The ‘address-only’ approach has been in effect since early 2024, and this latest wave of enforcement actions increases the number of addresses that can trigger an export violation.

Guidance for Exporters and Re-exporters 

BIS has provided new guidance for exporters and re-exporters recommending the inclusion of contractual clauses to prevent evasion of Russia sanctions.  

While items subject to the EAR are not required to follow the EU’s “No re-export to Russia” clause in contracts, BIS emphasized that including such a clause could help protect sellers from liability. The agency also highlighted that a buyer’s refusal to accept this clause should be viewed as a potential red flag for diversion risk, signaling possible attempts to bypass Russia sanctions. 

Additionally, updated guidance was also provided to foreign corporate service providers for how they can screen their own addresses against denied party lists and address-only listings to protect their compliance.

The Significant Impact of New Export Controls on Businesses 

The new BIS export controls and Russia sanctions significantly raise the export compliance demands for global businesses. These measures heighten the need for businesses to implement stricter due diligence processes and enhanced supply chain oversight, particularly when dealing with entities in regions like China, Iran, and others affected by these controls. 

Through the latest Entity List additions and designations under the expanded “Russian/Belarusian Military End Users,” U.S. businesses must secure a difficult-to-obtain export license before shipping to the targeted companies, as the license is subject to a presumption of denial. 

With the inclusion of denied parties in allied countries like Canada and Türkiye, companies need to adopt more rigorous denied party screening practices and actively monitor business partners across all countries, not just traditionally high-risk areas. 

Export Compliance Software is Critical to Comply with Russia Sanctions 

Effectively navigating the new BIS export control measures and preparing for future regulatory changes is essential for protecting business continuity. Non-compliance with these regulations can result in a range of severe legal, financial, and reputational consequences. Both intentional and unintentional export violations carry penalties, making compliance a critical priority for every organization.  

Export compliance programs with manual processes quickly become unsustainable, even for mid-size businesses. Due to the sheer volume of sanctions and regulations to follow, manually cross-checking new, existing, and potential partners against denied party lists from even one regulatory agency is time intensive. Additionally, many other agencies from multiple countries have imposed Russia sanctions, which must also be adhered to, making the task even more challenging and resource heavy.  

Automated export compliance software offer much-needed efficiency and accuracy in managing these compliance requirements. Advanced solutions enhance denied party screening by automating the identification of newly added entities and restricted addresses, and ensuring businesses comply with evolving Russia sanctions. These tools offer real-time updates and integration capabilities, allowing businesses to stay agile in managing risk. 

Prevent Russia Sanctions Violations with Descartes’ Export Compliance Solutions 

The sweeping BIS Russia sanctions, including new Entity List additions, ‘address-only’ designations, and expanded export restrictions, pose significant challenges for businesses managing export controls. The U.S., EU, and other allied nations are targeting Russia’s economic infrastructure to weaken its war efforts in Ukraine. 

There’s increasing scrutiny on sanction evasion and support networks helping Russia bypass trade restrictions. Additional sanctions and aggressive enforcement actions will likely be rolled out in the future. We’ve already seen how this can affect businesses, as fines and penalties are imposed on organizations violating sanctions regardless of intent.  

Descartes’ comprehensive export compliance solutions help businesses manage these new BIS measures and prepare for future regulatory changes. With Descartes’ advanced denied party screening tools, companies can automate the identification of newly added entities, address-only listings, and Russian/Belarusian Military End User designations. 

Our solutions provide real-time regulatory updates, seamless integration with business systems, and enhanced risk mitigation to prevent export violations. We also offer export license acquisition and management capabilities to ensure end-to-end compliance with evolving export controls. 

Ready to strengthen your export compliance program and protect your business? Contact us today to speak to a Russia sanctions compliance specialist. We have also put together a resource center for the Russia-Ukraine conflict to help you stay informed about the latest developments with business implications. 

Additionally, you can read what our customers are saying about Descartes Denied Party Screening on G2 – an online third-party business software review platform.