Through the Back Door: The Sanctions Evasion Threat from Russia-Friendly Nations

Western sanctions regimes, particularly those imposed by the United States, the European Union, and the UK, were intended to economically isolate Russia and Belarus following the full-scale invasion of Ukraine in 2022. However, the impact of these measures is being eroded not by declared adversaries, but by a cohort of countries that maintain diplomatic or commercial relations with the West while simultaneously enabling sanctioned actors. These so-called 'friendly nations' offer Russia a back door into global trade and finance, sustaining its war economy while preserving plausible deniability.

At the heart of this enabling network lie China and Iran. China, Russia’s largest trading partner, has consistently resisted Western calls to curtail bilateral trade. Its exports to Russia have grown markedly, particularly in categories with potential military applications. Iran, having honed its sanctions evasion strategies through decades of economic siege, is now exporting its playbook. The two countries have strengthened political and security ties with Russia, forming a loose axis of resistance to Western-led norms.

This emerging geopolitical order generates enforcement blind spots that traditional compliance frameworks cannot adequately address. As sanctions circumvention increasingly relies on indirect exposure, trade intermediaries, and digital concealment, risk vectors have multiplied beyond the reach of conventional controls. Financial institutions and exporters face a fundamentally altered landscape, in which sanctioned activities masquerade behind legitimate transactions and friendly façades.

The Role of Enabling Jurisdictions: More Than Bystanders

China’s role in sanctions circumvention is characterised not only by volume but also by strategic complexity. In 2023, exports of dual-use items such as semiconductors, ball bearings, and CNC machine tools surged. Much of this trade is re-exported through countries like Kyrgyzstan and Armenia, which serve as logistical intermediaries rather than producers. Although these goods are not always explicitly prohibited, many fall into high-priority categories scrutinised by US and EU authorities due to their military applications.

Iran’s contribution is both operational and instructive. Over decades of embargoes, Tehran has developed a playbook comprising barter trade, the use of offshore corporate structures, and cryptocurrency settlements. These methods have been adapted by Russian entities, particularly in oil trade, where evasion tactics include non-dollar settlements, concealed ownership, and the creation of murky logistical chains.

Other jurisdictions enabling these activities include Turkey, the United Arab Emirates, Kazakhstan, and Serbia. The European Commission’s 2024 analysis highlighted a “revolving door” dynamic, in which goods subject to export controls reappear in Russian markets after passing through third countries. The resultant gap between sanctions policy and enforcement reality is widening, exposing significant vulnerabilities in global trade oversight.

High-Risk Commodities: Oil, Semiconductors, Luxury Goods

Oil remains the cornerstone of Russia’s economy, and circumventing sanctions on petroleum exports has become a priority for the Kremlin. The G7 price cap introduced in late 2022 was designed to limit Russia’s revenue without disrupting global supply. However, enforcement loopholes have allowed a shadow fleet of tankers to operate with impunity. These vessels routinely engage in ship-to-ship transfers, disable AIS tracking systems, and obscure ownership through opaque corporate structures in jurisdictions with lax maritime regulation. The Centre for Research on Energy and Clean Air (CREA) estimates that over half of Russia’s seaborne oil exports are now moved using such tactics.

Semiconductors and other dual-use technologies are indispensable to Russia’s military-industrial complex. Western export controls have spawned a parallel market in which sensitive components are funnelled through permissive jurisdictions. The Royal United Services Institute (RUSI) has documented a sharp increase in the shipment of electronic components to Russia via Hong Kong and Central Asia, often under misdeclared product codes or through intermediary firms with tenuous transparency.

Luxury goods also play a surprisingly central role. High-value, portable items such as watches, jewellery, cars, and consumer electronics have featured prominently in sanctions circumvention cases. These goods are not only used to maintain elite lifestyles under sanctions but are also favoured in trade-based money laundering schemes due to their liquidity and ease of cross-border movement.

Emerging Obfuscation Technologies

The methods used to evade sanctions have grown more sophisticated with the adoption of digital tools and technological concealment. Maritime actors increasingly engage in AIS spoofing and GPS manipulation to disguise vessel movements, especially in the Mediterranean and Indian Ocean routes associated with Russian oil exports. This frustrates oversight efforts and enables covert transshipments.

Cryptocurrency and blockchain technology have emerged as useful instruments in sanctions evasion. While the volume of rouble-to-crypto conversions remains limited, Russia has turned to stablecoins such as Tether to facilitate payments through offshore exchanges. These transactions can be executed rapidly and without traditional banking oversight, reducing visibility for enforcement agencies.

Perhaps most concerning is the rise of AI-driven obfuscation. Synthetic identity tools now allow for the generation of fictitious documents, business profiles, and digital personas. These capabilities complicate KYC and UBO verification, especially in jurisdictions with minimal regulatory oversight. Combined with shell companies and digital nomad bank accounts, such tools facilitate the creation of business facades indistinguishable from legitimate operations.

FATF & EU Policy Responses

The Financial Action Task Force (FATF) has repeatedly sounded the alarm on the abuse of complex corporate structures and trade-based money laundering to evade sanctions. At its October 2023 plenary, FATF stressed the importance of closing gaps in public-private information sharing, particularly regarding high-risk jurisdictions and commodities.

The European Union’s twelfth sanctions package marked a significant step forward by introducing mandatory end-use verification for high-risk goods and tightening controls on entities indirectly supporting Russia’s military sector. Asset freezes have also been extended to encompass firms found to be materially aiding sanctioned activity, even when they are based outside the EU.

Nevertheless, enforcement remains uneven. Variations in national implementation and customs capabilities undermine the cohesion of the EU’s sanctions regime. Unlike the United States, the EU lacks a unified secondary sanctions mechanism, which limits its ability to pressure third countries into compliance. The consequence is a system in which rules are stringent on paper but inconsistently applied in practice.

Strengthening Private Sector Response: Strategic Recommendations

To counter the growing threat posed by friendly nation facilitators, private sector actors must move from procedural compliance to strategic denial. This requires a more granular understanding of geopolitical risk and a willingness to proactively disrupt suspicious flows.

Enhanced due diligence must become the norm in transactions involving high-risk jurisdictions. This includes detailed scrutiny of end-users, analysis of supply chain integrity, and deeper investigation into corporate ownership structures. Standard KYC measures are no longer adequate; they must be supplemented by investigative tools, including open-source intelligence, trade pattern analysis, and geolocation tracking.

Geospatial analytics can provide early warning indicators. Sudden changes in shipping routes, AIS signal blackouts, and disproportionate surges in trade volumes along obscure corridors should trigger red flags. Some financial institutions are already integrating AI tools into their monitoring systems to detect such patterns, allowing for earlier intervention.

Cross-industry collaboration is also essential. Networks such as the UK’s Joint Money Laundering Intelligence Taskforce (JMLIT) and the EU’s FIU.net provide platforms for real-time intelligence sharing. This collective approach is vital to overcoming the fragmentation that often characterises sanctions enforcement across borders and sectors.

Above all, institutions must embrace a culture of anticipatory risk management. This involves embedding geopolitical expertise into compliance functions and being willing to exit relationships that, while technically compliant, expose the firm to unacceptable levels of risk.

Conclusion: Closing the Back Doors in an Era of Multipolar Risk

The effectiveness of sanctions depends not only on legal architecture but on the willingness of the global community to enforce them. As long as friendly nations continue to act as intermediaries, Russia will retain access to critical goods, capital, and services. This is not merely a tactical challenge; it represents a strategic threat to the credibility of sanctions as a tool of international governance.

A new era of sanctions enforcement must combine real-time intelligence, advanced analytics, and geopolitical foresight. Policymakers must harmonise secondary sanctions regimes, target shadow facilitators, and hold intermediary jurisdictions accountable.

For the private sector, the challenge is no longer about checking boxes but about recognising the shifting terrain of global finance. Compliance must evolve into a function of strategic vigilance, capable of anticipating and disrupting the flow of illicit finance before it reaches its destination.

In a world of contested norms and multipolar interests, the real danger may not lie in open defiance, but in quiet complicity. The true test of sanctions policy is not in how it addresses declared enemies, but in how it closes the back doors opened by its friends.

How Do Friendly Nations Quietly Enable Sanctions Evasion and What Can Your Organisation Do About it?

Read our white paper Closing the Back Door: Friendly Nations and the New Frontier of Sanctions Evasion for a strategic view of how permissive jurisdictions like China and Iran undermine enforcement efforts and what this means for financial crime compliance.

See how these tactics work in practice with our case study Unmasking Sanctions Evasion: Strengthening Compliance to Block Illicit Payments, which exposes how trade finance mechanisms were exploited to move funds for sanctioned entities.

To strengthen your organisation’s defences, explore how OpusDatum helps clients detect, disrupt and respond to evolving sanctions risk with intelligence-led advisory support.