Since the EU sanctions against Russia in 2022, Dutch exports of goods to Russia have fallen sharply. However, research by Statistics Netherlands (CBS), carried out together with the University of Groningen, shows that part of this trade has not disappeared, but appears to be reaching its destination via detours. A recent court case illustrates what such a circumvention route looks like in practice.
What the research shows
Dutch exports of goods to Russia in 2023 were around 63% lower than the 2018–2021 average. At the same time, exports of sanctioned goods to seven countries with an elevated risk of sanctions circumvention actually increased: Armenia, Kazakhstan, Kyrgyzstan, Mongolia, Serbia, Turkey and Turkmenistan.
What stands out is the type of company behind this export flow. CBS observes that a striking number of young, small companies — which did not export these products at all before 2022 — started exporting to these countries after the sanctions were introduced. These companies often act as intermediaries for goods they do not produce themselves, suggesting a role as a transit hub in a longer supply chain.
A concrete case
How such a circumvention route works in practice is shown by a recent criminal case in which the court convicted two people of violating the Dutch Sanctions Act. Before the Russian invasion, the goods in question — including computer chips and other dual-use products — were exported directly to Russia. After the sanctions were introduced, the trade shifted to countries without trade restrictions on Russia, which acted as transit points.
A defining feature of the arrangement was the use of several intermediaries and intermediate companies to make the flow of goods as complex as possible. The case came to light because a bank reported an unusual transaction. Further investigation revealed an abrupt change in the customer base around the time of the invasion, as well as Russian shareholders at the receiving companies. Research into the subsequent customers in the chain showed that the goods most likely still ended up in Russia.
Red flags to watch out for
Both the CBS research and the court case yield concrete signals that call for extra attention:
- New customers in high-risk countries — a sudden new sales market in a country known as a circumvention route, especially shortly after a sanctions package.
- Intermediary trade without a clear function — a buyer that neither produces nor uses the product itself, and for which it is unclear why it acts as an intermediary.
- Complex chains with many intermediaries — the more links between exporter and end user, the harder it is to verify the end use, and the more likely that this was set up deliberately.
- Unclear ownership structure — shareholders or UBOs with ties to the original sanctioned country.
- Abrupt change in the customer base — a new customer pattern that coincides with the introduction of sanctions.
Example from practice
A Dutch supplier of electronic components receives an order from a new distributor in Kazakhstan. The order pattern and product specifications closely match what used to be supplied to a Russian customer, but that relationship was terminated after 2022. Without further investigation into the final destination and the underlying ownership structure of the new buyer, the supplier runs the risk that the goods still end up, via a detour, with the original end user.
Frequently asked questions
Does exporting to these seven countries automatically mean a problem?
No. These are countries with a statistically elevated risk of sanctions circumvention, not a ban. However, exporting sensitive goods to these destinations does call for more thorough research into the end user.
How do I check whether an intermediary has a legitimate role?
By investigating whether the intermediary has a demonstrable operational role (storage, processing, distribution) and does not merely act as a pass-through without any economic added value.
What if my bank asks for additional information about a transaction?
Take it seriously: banks themselves are screening ever more strictly for signs of sanctions circumvention. A timely and well-founded response prevents delays and reduces the risk of further questions.
TradeRisk supports companies with export control and end-user research, including the assessment of destination countries and intermediaries in the supply chain. Also read more about what end-use screening involves and what dual-use goods are.