U.S. sanctions two Montreal companies for alleged ties to Russia

The Canada Border Services Agency says it helped put two Montreal-based companies with alleged ties to the Russian military on a United States sanctions list.

Late last month, the U.S. Commerce Department added the two Canadian companies -- CPUNTO Inc. and Electronic Network Inc. -- to a list of entities that face strict export controls because of their “significant” contribution to Russia’s “military and/or defense industrial base.”

Both companies are legally headquartered in the Montreal borough of St-Laurent and describe themselves online as sellers of electronic components.

The U.S. government identified both companies as “Russian or Belarusian ‘military end users,'" banning them from exporting almost any good manufactured in the U.S., as well as intellectual property, such as computer software. Canada, along with the U.S. and other countries, has a imposed a series of sanctions against Russia since its invasion of Ukraine in February 2022.

CBSA spokeswoman Rebecca Purdy said the agency is working closely with the U.S. government, sharing intelligence and targets and conducting joint investigations.

"The CBSA works with the U.S. Bureau of Industry and Security to bolster efforts to address Russia’s aggression in Ukraine through stringent enforcement measures; we are restricting Russia’s access to technologies and other goods Russia needs to sustain its aggressive military capabilities," she wrote in an email Monday.

The CBSA has reviewed more than 500 shipments heading to Russia since the invasion of Ukraine, she said. "Of those, several dozen have been referred for in-depth examinations, with seven resulting in administrative monetary penalties being levied against exporters, eight shipments being recommended for seizure and three shipments being withdrawn."

The agency did not immediately respond to questions about whether any of those shipments were related to the two companies sanctioned by the U.S.

Neither CPUNTO Inc. nor Electronic Network Inc. responded to requests for comment.

Christian Leuprecht, a professor at the Royal Military College and Queen’s University, said it's possible the companies are operating in Canada because it is a well-connected country that manufactures high-end technology. It's also possible, he said, that they are trading elsewhere and using a Canadian registration to avoid suspicion.

Companies can also evade sanctions by leveraging the supply chains of legitimate firms -- removing computer chips from refrigerators or cars and repurposing them for military use by Russia -- Leuprecht said in an interview Tuesday.

Leuprecht, who is also a senior fellow at the Macdonald-Laurier Institute, said Canada's police and intelligence services need to do a better job of fighting sanctions evasion.

"It suggests to me the hypocrisy of the current federal government; we love to announce all these sanctions against Russian entities and yet we can't root out the very companies, in our own country, that are evading sanctions and aiding and abetting sanctions evasion," he said.

Leuprecht said he's not aware of a single RCMP investigation that led to criminal charges for sanctions evasion. With the Canadian Security Intelligence Service largely limited to domestic operations, Canada depends on its allies for information about what Canadian-registered companies are doing abroad, he added.

"We should look at this not as a one-off, but as sort of the canary in the coal mine ... Canada needs to do a lot better and work a lot harder at making sure that this country isn't used to evade international sanctions if the federal government pretends to be serious about its support for Ukraine."

This report by The Canadian Press was first published March 7, 2023.