Dutch suspect evaded sanctions by exporting microchips to Russia through third countries

Dutch-Russian Dimitry K., suspected of exporting microchips and drones to Russia, managed to circumvent the European sanctions against the country by exporting the illicit goods through third countries. He is the first Dutch smuggler to be arrested for sanction evasion, the Volkskrant reports.

The police arrested K., from Gorssel in Gelderland, in September last year. According to the Public Prosecution Service (OM), he exported hundreds of thousands of euros worth of microchips and drones, and similar parts were later found on the battlefield in Ukraine. K. does not deny the allegations against him, the OM said during the first hearing against him in December. He considers himself a small link, an interchangeable player, in the chain of tech products heading to Russia, the OM said.

The Dutch authorities came onto Dimitry K.’s trial at the end of the summer of last year when a Dutch bank notified the Financial Intelligence Unit (FIU) of suspicious transactions by Woerd-Tech BV, the company K. founded in 2016. According to the Chamber of Commerce, the company imports and exports radio-electronic components, steel and metal products, and cables and wiring.

Until the Russian invasion of Ukraine in February last year, K. achieved a turnover of about 130,000 per month exporting computer parts to Russia. Immediately after the invasion, the European Union imposed sanctions against Russia, banning the export of advanced technology and dual-use goods - items that can be used for both civil and military purposes, like drones. K.’s business came to a standstill, and he earned next to nothing in March, according to the Volkskrant.

But from April, K.’s business started running again. He supplied his existing customers by sending their orders through non-sanctioned countries like Turkey or Kazakstan. In the summer months, his turnover was even three times higher than before the war, the OM said, according to the newspaper.

According to the OM, K. purchased technology and electronic goods worldwide, had them physically sent to the Netherlands, and then sent them on to Russia “disguised via other countries.” The products K. sent were “presumably used for the technological and military reinforcement of Russia.

Exporters are obliged to fill in an end-user on their export declaration and must also complete an End User Statement when purchasing goods. K. committed fraud on these documents, according to the OM, entering “Ukrmoravia” in Ukraine as the end user.

Based on communications on K.’s phone and computer, the OM believes that this is a “fictitious company.” K. understood that “it was better not to mention Russia when purchasing goods” and therefore set up this front “presumably to avoid suspicion among producers.” He did so in 2017, a few years after the first sanctions against Russia for its occupation of Crimea.

K.’s actual buyer is Alexej Belosochov, who lives in Moscow, the Volksrkant wrote. He is a purchasing manager at the Russian IT company SpetzPromSvyaz. According o the OM, the company has a special license from the Russian intelligence service FSB to supply Rostec, a State-owned conglomerate of hundreds of high-tech and defense companies led by Sergei Tsjemezov, an old KGB buddy of Vladimir Putin.

Other culprits

K. is by no means the only Dutch person exporting technology and other sanctioned goods to Russia through third countries, Volkskrant research showed. A United Nations database that keeps track of how much goes from one country to another based on product type shows that trade in communication equipment between the Netherlands and Serbia, Turkey, Turkmenistan, Uzbekistan, and Kazakhstan increased from 21 million dollars to 27 million dollars per month. Trade in computer parts to Russia’s neighbors increased from 16 million dollars to nearly 22 million dollars. At the same time, the re-export of these items from the mentioned countries to Russia also increased enormously since the invasion.

This way of circumventing sanctions is a problem, lawyer and sanctions specialist Saskia Rietbroek said to the newspaper. It is punishable but much more challenging to control than exports directly to the sanctioned country. Since October, the EU has therefore started sanctioning people for exporting sanctioned goods from EU countries to Russia through third countries.