Dual-Use Goods Under Scrutiny Amid Rising Sanctions Evasion

As geopolitical tensions mount and trade becomes increasingly weaponized, economic sanctions have emerged as one of the most powerful tools in the arsenal of foreign policy. But while policymakers tighten controls, bad actors adapt. A growing body of evidence now reveals that sophisticated networks are actively undermining global sanctions—leveraging trade flows, loopholes, and lax oversight to re-export sensitive goods into high-risk regions.

Using proprietary data from Trademo Intel and Trademo Sanctions Screener, this investigation exposes how U.S. exporters knowingly or otherwise have become vectors in these covert operations. Out of 96,000 shipments examined between 2014 and 2025, 11 U.S. companies were found to have direct or indirect links to entities sanctioned under the CHPL (Common High Priority List), facilitating the re-export of dual-use goods to embargoed destinations such as Russia, Iran, and Belarus. These findings raise urgent red flags for compliance officers, investigators, and regulators worldwide.

The Dual-Use Threat: Hidden Dangers in Plain Sight

At the heart of this compliance breakdown are dual-use goods—civilian technologies with military or weapons-related applications. The shipment records uncovered span a troubling array of HS codes covering:

• Advanced Semiconductors & Integrated Circuits (HS 8542 series): Critical for everything from consumer tech to missile systems.

• Computing & Telecommunications Equipment (HS 8517, 8471): Enabling both civilian communication and military command infrastructure.

• Precision Optics & Instruments (HS 9013–9030): Essential for surveillance, targeting, and weapons calibration.

• CNC Machinery (HS 8457, 8466, 8486): Used in both civilian manufacturing and military-grade production lines.

• Miscellaneous High-Risk Components: From radar systems (HS 8526) to bearings (HS 8482), each with latent military potential.

While each product has a legitimate end-use, these items are increasingly being funneled—via intermediaries—to bolster the military capabilities of sanctioned regimes. This dual-use dilemma sits at the intersection of global commerce and national security, requiring compliance teams to operate with heightened precision and foresight.

The Re-Export Loophole: How Sanctions Are Being Bypassed

Despite international embargoes, re-export networks have exploited several blind spots in global trade enforcement:

• Shell Companies and Fronts: These legally registered entities in third countries often have no physical presence. They act as intermediaries, masking the end-user and allowing sensitive goods to slip through regulatory nets.

• Transshipment Hubs: Goods are rerouted through countries with weaker export controls, disguising their origin and final destination.

• Free Trade Zones: FTZs provide customs relaxations that can be leveraged for illicit redirection of shipments.

• Post-Shipment Monitoring Gaps: Once goods leave the exporter’s jurisdiction, inadequate monitoring enables diversion.

• Technological Evasion: Sanctioned entities are developing indigenous production, reverse engineering goods, and exploiting cyber capabilities to obtain what they cannot buy legally.

• Enforcement Disparities: While sanctions enforcement has improved, inconsistencies between jurisdictions create exploitable seams in the global compliance fabric.

These tactics aren’t just opportunistic—they are deliberate and systematic. The use of layered intermediaries, indirect shipping routes, and administrative blind spots all contribute to a global re-export web that thrives in opacity.

The Data: A Concentrated Risk Within a Massive System

What makes these findings particularly alarming is the concentration of risk:

• 11 U.S. exporters were linked to CHPL-sanctioned entities.

• These exporters re-shipped dual-use goods to Russia, Iran, and Belarus.

• This activity occurred within a larger dataset of 96,000 shipments.

While this represents a small numerical percentage, the national security implications are disproportionate. Each transaction involving these goods has the potential to bolster the military or surveillance capabilities of sanctioned regimes. It demonstrates how even a few non-compliant players can introduce significant systemic risk into global supply chains.

These 11 exporters were not operating on the fringes; they navigated through mainstream trade flows and regulatory structures. The re-exports included high-risk HS codes, from precision instruments to telecom infrastructure, which are central to the intelligence and defense capabilities of recipient regimes.

Visualizing the Threat: Dual-Use Category Distribution

To better illustrate the scope of the risk, the following breakdown highlights the approximate distribution of dual-use goods identified in these illicit re-export transactions.

• Semiconductors & ICs: 32%

• Computing & Telecom: 18%

• Precision Instruments: 15%

• CNC Machinery: 10%

• Other Critical Components: 25%

This distribution underscores the prominence of semiconductors and electronics in modern dual-use risk. These are the building blocks not just of consumer goods but of surveillance, targeting, and defense systems.

Note: Note: The dual-use category distribution was calculated by grouping HS codes from flagged shipments into five risk categories based on their end-use function (e.g., semiconductors, telecom, optics). The percentages reflect the relative share of each category within the total flagged cases, using Trademo’s internal HS code classification framework.

Why Traditional Compliance Fails—And What’s Needed Now

Manual compliance checks and static screening tools are fundamentally ill-equipped to address the evolving sophistication of sanctions evasion. They often fail due to their reliance on outdated sanctions lists, which can quickly become obsolete in a fast-moving regulatory environment. Additionally, such systems tend to generate high volumes of false positives, creating operational inefficiencies and causing alert fatigue among compliance teams. Another critical shortcoming is the inability of manual processes to detect hidden networks of entities such as shell companies or affiliates in obscure jurisdictions—that are often used to mask sanctioned end-users. Moreover, manually analyzing HS codes to determine dual-use classification is both time-consuming and prone to human error, increasing the risk of missing high-risk goods.

To overcome these limitations, compliance teams must shift toward intelligent automation. Platforms like Trademo Sanctions Screener provide a more resilient model by integrating real-time screening across global sanctions lists, including OFAC, UN, and EU updates. These tools utilize AI-based risk profiling to uncover complex entity relationships, hidden ownership structures, and suspicious patterns of trade behavior. Another key feature is the automatic classification of HS codes against dual-use lists and export control regulations, significantly reducing the chances of oversight. When these capabilities are embedded into workflows—especially across procurement, logistics, and sales they ensure that compliance is not a checkpoint, but a continuous process.

The benefits are clear: organizations not only reduce their compliance risk but also prevent the unintentional empowerment of sanctioned regimes through commercial trade. Automated tools enable teams to move beyond surface-level checks and develop a more dynamic, intelligence-led approach to compliance.

Beyond the Tools: Embedding Compliance into Corporate DNA

However, deploying the right tools is only one part of the equation. True compliance maturity stems from embedding risk awareness and control mechanisms into the fabric of the organization. This begins with fostering cross-functional collaboration—ensuring that compliance, legal, sales, procurement, and logistics departments work together with shared accountability. Comprehensive training and awareness programs are essential, enabling employees at all levels to recognize export control risks and understand the implications of sanctions violations.

Third-party due diligence must be rigorous and ongoing, with all suppliers, customers, and intermediaries evaluated for potential exposure to high-risk regions or entities. Equally important is maintaining strong audit readiness: organizations must document their compliance decisions, maintain records of risk assessments, and be prepared to demonstrate their controls to regulators at any time.

In today’s volatile global trade landscape, reactive compliance is no longer sufficient. The risks are too complex, and the consequences too severe. A proactive, integrated compliance strategy—powered by both technology and culture—is the only sustainable path forward.

What Governments and Industry Must Do Next

To effectively close the growing number of sanctions enforcement loopholes, both governments and the private sector must embrace a cooperative and coordinated approach. One of the most pressing needs is the global harmonization of sanctions frameworks. Right now, exporters and regulators are often navigating a fragmented web of rules, with varying enforcement mechanisms across jurisdictions. This inconsistency creates exploitable gaps, especially for bad actors who intentionally operate across borders. By aligning enforcement rules, sanctions designations, and compliance expectations globally, authorities can reduce the room for ambiguity and improve the overall integrity of the global trade system.

Another critical need is stronger intelligence sharing between government agencies and the private sector. Customs authorities, financial regulators, export control bodies, and logistics firms all hold different pieces of the puzzle when it comes to understanding how goods move, who is buying them, and where they’re ultimately headed. Creating secure, real-time information-sharing platforms supported by data from sanctions screeners, banks, shipping lines, and investigative bodies—can help identify suspicious trade patterns earlier and more accurately.

Governments must also take a hard look at the growing misuse of Free Trade Zones (FTZs) and transshipment hubs. While FTZs are designed to facilitate economic growth and efficiency, they often lack the customs scrutiny and export controls of traditional ports, making them attractive to evasion networks. Increasing oversight, introducing technology-based cargo monitoring, and requiring due diligence from companies operating within FTZs will be essential to reducing risk.

Finally, incentivizing compliance investments can help align commercial goals with regulatory expectations. Whether through regulatory relief, certifications, or favorable government partnerships, businesses that invest in advanced compliance tools and due diligence processes should be rewarded. This not only encourages proactive behavior but also levels the playing field against less diligent competitors.

It’s also worth recognizing the critical role of investigative journalism in uncovering sanctions evasion networks. Publications like The Wall Street Journal have helped surface the complex structures and behaviors behind illicit trade. Supporting transparency and open-source intelligence isn’t just beneficial it’s fundamental to building public pressure and driving policy reforms that enhance global compliance infrastructure.

Closing Insight: From Vulnerability to Vigilance

The identification of 11 U.S. exporters linked to re-exports of dual-use goods to sanctioned regions is not merely a data anomaly—it is a glaring signal of a much deeper, systemic challenge within the global sanctions enforcement landscape. These companies did not operate in a vacuum; they navigated through standard supply chain processes, often exploiting gaps in oversight and inconsistencies in regulatory enforcement. Their actions, whether intentional or due to lack of diligence, have enabled sensitive technologies to reach regimes that threaten international peace and stability.

This investigation highlights that dual-use re-exports—items that appear harmless on the surface but possess significant military or surveillance potential pose a growing and credible threat to global security. It is no longer sufficient to treat compliance as a procedural formality or a box to check during audits. For Chief Compliance Officers, trade managers, and procurement heads, compliance must evolve into a strategic function—one that continuously evaluates risk, embeds accountability across departments, and adapts to the changing tactics of sanctions evasion actors.

Tools like Trademo Sanctions Screener offer more than just peace of mind. They represent the next generation of intelligent trade compliance—capable of screening real-time entity relationships, flagging risky HS codes, integrating into daily workflows, and exposing hidden linkages that manual checks often miss. But investing in these tools isn’t just about avoiding fines or passing audits. It’s about preserving the integrity of your business, supporting global norms, and preventing your operations from becoming an unintended enabler of geopolitical conflict.

Ultimately, in today’s interconnected world, every shipment is a decision. It can empower peace, or it can arm conflict. For the global trade community, choosing vigilance over vulnerability isn’t just a regulatory requirement—it’s a moral and strategic imperative.