(Bloomberg) -- The Treasury’s sanctions office is investigating several US and foreign companies for shipments of chips with military applications that ultimately end up in Russia, according to a US official.

The investigations by the Office of Foreign Assets Control, or OFAC, are part of a broader effort to crack down on firms around the world that help Moscow get around restrictions imposed by Western nations to keep its war apparatus against Ukraine going. Names of the specific firms being probed weren’t immediately available.

Senior officials from the Treasury, Commerce and State Departments have been reaching out to US-headquartered microelectronics manufacturers to crack down on the flow of chips to Russia, the US official said. The US Treasury declined to comment.

The US and European Union are increasingly focused on Russia’s use of foreign components to produce weapons for its war machine, against a backdrop of deepening concerns over the possible collapse of Ukrainian defenses.

One aspect of the OFAC probe looks at whether US financial institutions are being used to facilitate trade with sanctioned individuals, the US official said. OFAC has also worked to prevent such shipments through administrative injunctions and blocking orders.

Restricted Goods

The Biden administration and its European allies are also looking into distributors and subsidiaries that appear to have sold restricted goods, according to officials on both sides of the Atlantic familiar with the matter. Part of the increased US outreach involves encouraging companies to be more vigilant at all stages of the supply chain, the US official said.

Experts are working with companies to analyze data on over 600 distributors that appear to have continued to sell restricted parts to Russia and working with the companies to remove these distributors from their supply chains, according to the US official.

Russia imported more than $1 billion of advanced US and European chips alone last year — despite restrictions intended to stop President Vladimir Putin’s military from sourcing technology to fuel its war against in Ukraine.

Classified Russian customs service data obtained by Bloomberg show that more than half of imported semi-conductors and integrated circuits in the first nine months of 2023 were manufactured by US and European companies.

Priority Items

The US and EU have focused much of their sanctions enforcement work on a list of “common high priority” items in recent months, of which chips are a slice. The list also includes dozens of other parts, components and advanced technologies such as electronics that have been found in missiles and other military systems used by Russia against Ukraine.

The Kyiv School of Economics reported in January that Russia imported $8.77 billion of battlefield goods – a list similar to the EU’s and US’s high-priority items – between January and October last year.

The trade underlines the difficulties facing the US and EU in choking off high-tech supplies to Russia’s war machine in repeated rounds of sanctions since the February 2022 invasion of Ukraine.

Actions to enforce sanctions have included export restrictions on companies in third countries as well as diplomatic outreach by Europe and the US in those nations, asking them to curb re-exports to Russia. Turkey, the UAE, Kazakhstan and China have been major areas of focus of such efforts.

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But evasion has persisted — and at times increased — and officials now point to Southeast Asia, where several manufacturers have subsidiaries, as another region from where shipments are originating.

--With assistance from Daniel Flatley.

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