May 2, 2024
The Readbook is Kharon's weekly roundup of our published pieces, upcoming events, and the best-curated news feed on the intersection of international security and global commerce. Subscribe to the email version.
WEBINARS
On Dec. 22, the Biden administration issued Executive Order 14114, increasing the scope of items subject to export control restrictions and strengthening U.S. power to sanction foreign financial institutions that facilitate sanctions evasion. This webinar will focus on new additions to the Specified Items List and cover due diligence measures necessary to mitigate risk for commercial activity that may have a nexus to Russia. [Register Today]
On May 21, we will be hosting a webinar with Exiger on supply chain resilience in the defense industrial base. Our panel of experts will discuss the intricacies of the defense supply chain and associated legal requirements and share best practices for mitigating risks. [Register Today]
THIS WEEK ON THE KHARON BRIEF
Anti-Ukraine Russian Media Outlets Operate in Europe as Part of Russia’s Influence Efforts
On May 21, we will be hosting a webinar with Exiger on supply chain resilience in the defense industrial base. Our panel of experts will discuss the intricacies of the defense supply chain and associated legal requirements and share best practices for mitigating risks. [Register Today]
Russia’s Tech Incubators Play Key Role in the Country’s Wartime Economy
Ukrainian forces carried out a drone strike in early April on the Alabuga Special Economic Zone in Russia’s Tatarstan region, which was sanctioned by the U.S. government for its production of Iranian unmanned aerial vehicles (UAVs) in late February. [Read More]
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MEDIA ROUNDUP
SANCTIONS
The U.S. Department of the Treasury and the Department of State sanctioned nearly 300 entities and individuals, including those involved in developing Russia’s military-industrial base, its chemical and biological weapons programs, and its future energy, metals, and mining production and export capacity. [U.S. Treasury] [U.S. State]
Russia’s state-owned oil tanker company renamed some of its ships after cities in the country and switched their flags to Russia from Gabon following sanctions by the U.S. [Bloomberg]
The EU is discussing proposals to sanction key Russian liquefied natural gas projects and a ban on using EU ports to re-export supplies destined for third countries, as part of an effort to limit Moscow’s ability to generate revenues from the fossil fuel. [Bloomberg]
India has granted approval to four Russian firms to provide marine insurance covering tankers exporting Russian oil to the country, allowing Moscow to reduce its dependence on Western service providers. [Bloomberg]
The U.S., U.K., and the EU are pressing the UAE to show it is cracking down on firms evading sanctions imposed on Russia over the war in Ukraine. [Reuters]
Unable to source key technological components from the West due to sanctions, Russia is acquiring civilian tech from Chinese online sellers and repurposing it for the battlefield in Ukraine. [Nikkei Asia]
China's big banks are pulling back from financing Russia-related transactions out of concern over U.S. sanctions, leading some Chinese companies to turn to small banks on the border and underground financing channels. [Reuters]
Russia has been quietly shipping refined petroleum to North Korea at levels that appear to violate a cap imposed by the U.N. Security Council, the White House said, suggesting new sanctions could result. [Reuters]
The U.S. Department of the Treasury designated five individuals, as well as two companies operated by them, for helping a money exchanger and his company evade sanctions and facilitate illicit activities in support of Hizballah. [U.S. Treasury]
The U.K. imposed sanctions on three Ugandan politicians, including the Speaker of Parliament, following corruption charges. [U.K. Government]
COMPLIANCE + ENFORCEMENT
One of Canada’s largest banks was fined a record USD 6.7 million for five violations of Canada’s anti-money laundering and terrorist financing laws, and separately has set aside an initial USD 450 million in relation to one of three regulatory investigations in the U.S. [Bloomberg]
Lithuanian authorities are inspecting a company owned by the family of a prominent presidential candidate following media reports suggesting that the firm may have violated EU sanctions against exports to Belarus. [OCCRP]
Austrian authorities have urged the biggest Western bank in Russia to drop a deal linked to a Russian oligarch fearing a backlash from the U.S., a blow to the bank’s plans to unlock funds stranded in Russia. [Reuters]
A New York businessman pleaded guilty to conspiring to defraud the U.S. for his role in an illicit export control scheme to ship electronic components from the U.S. to companies affiliated with the Russian military. [U.S. Justice]
The U.S. Congress is weighing legislation to ban a Chinese drone maker by putting it on a Federal Communications Commission roster, which would block it from running on the country’s communications infrastructure. [NYT]
The Federal Communications Commission is ordering the U.S. units of several Chinese telecom carriers to discontinue fixed or mobile broadband internet operations in the U.S., citing national security concerns. [Reuters]
Two Chinese nationals were charged with crimes related to a conspiracy to illegally export U.S. technology, including a machine manufactured by a California-based company that is used to process silicon wafer microchips, to prohibited end users in China. [U.S. Justice]
An expanding array of U.S. state proposals, bills, laws, and regulations aim to block Chinese individuals and companies from acquiring land, winning contracts, working on research, setting up factories, and otherwise participating in the U.S. economy. [WSJ]
A Russian national residing in Sacramento was sentenced to 12 years in prison for attempting to provide material support to a designated foreign terrorist organization in Syria. [U.S. Justice]
A New York woman was sentenced to 18 years in prison for funding terrorism by using cryptocurrency to send financial support to groups operating in Syria. [NYT]
Two men pleaded guilty for their roles in an illicit scheme to transfer tens of thousands of dollars from the U.S. to Iran, including for the benefit of the Supreme Leader of Iran. [U.S. Justice]
The former chief executive of the world's largest cryptocurrency exchange was sentenced to four months in prison after pleading guilty to violating U.S. laws against money laundering. [Reuters]
TRADE CONTROLS + SUPPLY CHAIN
The U.S. Senate approved legislation to bar imports of Russian uranium, as the U.S. continues to seek to disrupt Russia's efforts in its war against Ukraine. [Reuters]
The U.S., Japan, and South Korea launched an initiative to enhance critical technology protection measures through expanded information-sharing and cooperation among their enforcement agencies. [U.S. BIS]
Japan said it plans to expand restrictions on exports of four technologies related to semiconductors or quantum computing, the latest in a global push to control the flow of strategic tech. [Bloomberg]
The U.S. is pushing allies in Europe and Asia to tighten restrictions on exports of chip-related technology and tools to China amid rising concerns about Huawei’s development of advanced semiconductors. [FT]
One of the world’s largest semiconductor testing and packaging services firms has divested its entire stake in a Chinese subsidiary, as part of efforts to exit mainland China amid geopolitical tensions and cross-strait chip supply chain changes. [SCMP]
The U.K. expects to have removed Chinese-made surveillance technology from sensitive sites by April 2025, as it seeks to tighten security amid increasing concerns about Beijing's spying activities. [Reuters]
RESEARCH SECURITY
Huawei is secretly funding cutting-edge research at American universities through an independent Washington-based foundation. [Bloomberg]
Foreign states are using U.K. universities to “steal advantage” by covertly acquiring British intellectual property, the government warned, saying it would explore proposals to protect cutting-edge research and technology. [Bloomberg]
HUMAN RIGHTS + FORCED LABOR
A “revolutionary shift” in the technology used in Xinjiang’s textile mills has seen a record surge in exports, in defiance of U.S. sanctions that have barred most Western fashion labels from selling any product woven with a strand of the region’s cotton. [SCMP]
Forced laborers are being transferred from China’s Xinjiang region to elsewhere in the country in growing numbers, a Biden administration official said, a problem that could test corporate efforts to comply with a U.S. supply chain crackdown. [WSJ]
Proposed U.S. legislation would expand the use of sanctions targeting Chinese government officials responsible for human rights violations against Uyghurs and other Turkic minorities in Xinjiang. [Radio Free Asia]
CRYPTO + CYBER
U.S. lawmakers are pressing the Biden administration on the use of cryptocurrency to evade sanctions in Russia, Iran, and North Korea, asking officials what additional authorities might be needed to prevent digital assets from being used by sanctioned entities. [Reuters]
The FBI has warned Americans against using cryptocurrency money transmitting services that are not registered as money services businesses and do not adhere to anti-money laundering requirements. [FBI]
Venezuela's use of digital currencies, expected to increase after the U.S. ordered a wind-down of oil deals with the sanctioned country by May 31, will require greater scrutiny by regulators and law enforcement. [Reuters]