Canada made it illegal to ship microelectronics to Russia. So why isn't the law being enforced?
Authorities are aware of Canadian cases of microelectronics being supplied to Russia
While Canadian authorities and the federal government are aware of numerous cases of companies and individuals directly and indirectly supplying Russia with illegal microelectronics since the start of the full-scale invasion of Ukraine, they have so far done little to enforce Canada's laws.
In an international scheme involving shell companies and layers of shipping agents, the Kremlin has managed to purchase and import at least a billion dollars of sanctioned technologies from around the world that it desperately needs to power its war machines.
"Due to Western sanctions and restrictions on technology and components needed to carry on its ongoing invasion of Ukraine," said Lucas Webber, a New Brunswick-based analyst and geopolitics expert with Tech Against Terrorism, "Russia is finding creative ways to tap into external industries and supply chains."
Everything from missiles to drones require electronic hardware that Russian industry either cannot produce for itself or cannot make fast enough to feed the demands of its military.
The U.S., Canada and most NATO member-states have levelled sanctions against Russia in light of its war in Ukraine, limiting or outright banning the shipment of microelectronics.
But beyond endless sanctioning and the pageantry of media conferences, the Department of Global Affairs — and the Trudeau government, writ-large — have done very little to make sanctions evaders a major mandate for federal authorities.
"Despite Russia's ongoing efforts to replace Western components in its weapons with Russian or Chinese alternatives, military experts continue to find many parts produced by Western manufacturers," said Olena Bilousova, a senior research analyst at the Kyiv School of Economics who works with Ukrainian authorities to monitor how the Kremlin makes its weapons.
In June, CBC News revealed a Toronto home address and a Canadian man had been linked to the illegal shipment of more than $80 million worth of microelectronics to Russia.
A few months earlier, CBC News also reported that hackers had obtained supply lists of manufacturers from a Russian arms maker of the electronics it used to build and power one of Russia's most important battlefield drones. Two of those companies, Aimtec and EXFO, are based in Montreal. Both companies said they do not supply parts to Russia.
And in March 2023, the United States sanctioned two other Montreal companies when it caught them supplying electronics to Russia, with another company in nearby Brossard quietly being added to the same list in late August.
Canada hasn't laid charges
Despite mounting evidence that Russia is using Canadian companies and people to acquire banned electronics, Canadian authorities haven't laid a single charge relating to the illegal export of sanctioned microelectronics to Russia or acknowledged an investigation into what experts say is a matter of national security.
"As is the case with many nations, Canada likely has staffing inadequacies, be it in specialist knowledge or quantity," said Webber referring to Canada's law enforcement personnel overseeing sanctions evaders.
He pointed out that Ukraine's allies also need to synchronize their lists of sanctioned entities to maximize the potential to catch Russian front companies using one nation to get around another.
"There are seemingly also communications and co-ordination issues with other states on sanctions enforcement."
The U.S. government, for its part, is aggressively pursuing charges against bad actors, including guilty pleas from Nikolay Goltsev and his wife, Kristina Puzyreva, Canadian-Russian nationals involved in directly sending the Russian military hardware for its Orlan-10 model drone; its most prolific on the battlefields of Ukraine.
One year into the full-scale invasion of Ukraine, the Department of Commerce in the U.S. created the Disruptive Technology Strike Force and it has already pursued over 16 cases involving the illegal shipment of supplies to Russia.
Canada has had ample time and evidence to lay its own charges. Puzyreva was sentenced earlier this month to two years in U.S. federal prison for her part in that scheme to ship parts to a Russian defence contractor making the Orlan. Goltsev is awaiting sentencing in December.
The couple travelled from Montreal to New York during their crimes and court documents show an even more direct Canadian link.
"Goltsev was purchasing coordinator for an electronics company in Montreal, Electronic Network, Inc., which was on the U.S. export controls list," reads a July sentencing memorandum for Goltsev. Prosecutors say he "had been purchasing electronic components for Russian military end users for over twelve years (well before he was married to Ms. Puzyreva)."
As Goltsev procured products, prosecutors say he texted a Russia-based co-conspirator that he "fully understands that this [ordered electronic component] is military in nature," leaving no doubt he was knowingly aiding and abetting the Russian military.
No other directors or company workers from Electronic Network (now defunct) have been charged in Canada for shipping what are essentially war goods to Russia.
U.S. and Canada work together
But the U.S. Strike Force told CBC News that it works hand in hand with the Canada Border Services Agency (CBSA) and has a liaison officer from the U.S. Bureau of Industry and Security (BIS) posted at the U.S. embassy in Ottawa.
CBSA says it co-ordinates with its American counterparts, "to share information and bolster efforts to address Russia's aggression in Ukraine" and "works closely with partners on a daily basis to identify efforts to ship restricted goods and technologies to Russia via third countries."
So far in 2024, the border security agency claims it has been busy assessing and detaining shipments for suspected sanctions violations.
"The CBSA has risk-assessed over 450,000 export declarations and referred approximately 70 shipments for detention and examination due to sanctions-related concerns," it said in a statement to CBC News. "These detentions resulted in approximately 50 enforcement actions, preventing the export of approximately $1 million worth of goods."
Among the assessed exports, only approximately "$50,000 of goods were seized by the CBSA due to suspected sanctions violations."
CBSA did not say if any of those inspections involved or have led to enforcement actions connected to the Kremlin scheme. No public disclosures of arrests or charges against individuals smuggling products to Russia have been made by CBSA since the full-scale invasion began in 2022.
Details emerge about Toronto case
New details tipped to CBC News have also emerged about the murky past of Edward Poberezkin — the man whose Toronto home appears on 2023 Russian customs data as the address of Alburton Enterprises Inc., a Caribbean front company linked to a host of people named in leaks of top secret offshore financial and legal records compiled by the International Consortium of Investigative Journalists (ICIJ).
In 2012, Poberezkin was publicly named as a person linked to a Czech political scandal involving Key Investments and other holding companies, which led to several indictments and a trail of corruption. Slovak business records confirm Poberezkin was a former director of Key Investments.
Geopolitics expert Webber, speaking about the Alburton case, says Canadian authorities may not understand how many people are "creating seemingly normal places of residence being used as transit hubs for illicit components.")
He did explain, however, that Canadian authorities like the RCMP and CBSA face a carefully crafted Russian operation that has painstakingly tried to hide its imports from Western intelligence services.
"Additionally, the Russian bureaucracy has a large team of lawyers, agents, assets and other resources dedicated exclusively to creating multiple, diversified and dynamic streams of components needed for the Russian [military industrial complex]."
Poberezkin did not respond to multiple requests for comment about his ties to Key Investments and Alburton, while the RCMP said they would not comment on whether or not they were investigating him or any other similar cases.
An RCMP spokesperson, in an emailed statement to CBC News, explained that Canada's federal policing agency is working in tandem with national and global security services to tackle sanctions evaders working for Russia.
The RCMP confirmed that they had not yet laid any charges under Canada's sanctions regime, but pointed out that CBSA officers are provided with the broader authority to lay charges in cases when they become aware of illegal shipments.
According to Bilousova it's "upsetting" that legal action hasn't been taken against Alburton, since it was exposed.
"I understand that building a case against a company for sanctions evasion requires considerable time and resources to gather sufficient evidence, but more could still be done," she said.
"A slow response in such cases allows companies time to reorganize, form new entities, and continue supplying goods to Russia."
U.S., Europe pursuing enforcement
The U.S. shows no sign of slowing efforts to prosecute sanctions evaders helping Russia.
In early August, assistant secretary Matt Axelrod, who leads the Strike Force, flew to Turkey and warned the government there that it needed to crack down on companies providing Russia with microelectronics or face major consequences.
Russian customs data for 2023 reviewed by CBC News shows Turkish middlemen companies as one of the top exporters of microelectronics to Russia.
In August, the State Department added 400 new sanctioned entities to its list, focusing on companies shipping microelectronics to Russia. This list, compiled in concert with Japan, the U.K. and several European nations, has not yet been adopted by Canada.
The U.S. has also created specific guidance to help companies that may be unaware their dual-use and military-grade items could be diverted to Russia through a murky chain of middle countries and front companies.
European countries, like the U.K. and Estonia, which arrested a deep cover Russian spy in 2023 for exporting computer technologies (he was eventually involved in the multi-prisoner swap with Russia in August), have prioritized cracking down on smugglers helping the Kremlin obtain microelectronics.
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