South Korean precision tools' appearance at Russian industrial expo highlights challenges of sanctions compliance

Russia's Prime Minister Mikhail Mishustin, far right, visits Metalloobrabotka-2025 at the Expocentre exhibition center in Moscow, Russia, on May 28. [TASS/YONHAP]

 
[EXCLUSIVE]
 
Even as global sanctions aim to choke Russia’s access to high-precision manufacturing equipment, a new investigation found that several South Korean machine-tool brands were on display at Russia's largest metalworking exhibition — highlighting the risk that these dual-use technologies could aid Russia’s defense industry.
 
The Economic Security Council of Ukraine (ESCU), a Kyiv-based think tank tracking sanctions evasions, said that products from at least three South Korean precision toolmakers were displayed at the annual Metalloobrabotka-2025 in May in Moscow. 
 
The event, often attended by Kremlin defense industry figures, showcased hundreds of foreign machine tools, including items subject to EU and U.S. dual-use export restrictions.
 
“The key issue is not simply covert shipments,” Olena Yurchenko, director for analysis and investigations at the ESCU, told the Korea JoongAng Daily. “What we find alarming is that products made by South Korean brands, which are de facto banned from Russia [since 2022], are now being openly advertised and promoted in Moscow." 
 
Often, the products are delivered to Russia through third-country channels. When supplied in quantity, they can be used to manufacture critical parts for missiles, drones and other weapon systems.
 
Experts say this underscores the need for Seoul to strengthen its enforcement capacity and raise corporate awareness of compliance obligations.
 

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Flow of South Korean machine tools to Russia [YUN YOUNG]

 

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Machine tools shipped via third countries

 

 
Behind these trade fair appearances lies a trail of recent shipments from South Korea to Russia, funneled through third countries to apparently evade the government's sanctions.   
 
The ESCU’s latest analysis of customs filings indicates that between 2024 and 2025, more than $3.7 million worth of Korean-made cutting tools and Computer Numerical Control (CNC) machinery entered Russia through complex transshipment networks involving China, Turkey, India, Uzbekistan, Lithuania and Thailand.
 
The data estimates that machinery included $2.19 million in threading, drilling and milling tools from a Berkshire Hathaway-owned Korean firm, $1.31 million in cutting and machine-tool accessories from a mid-sized manufacturer, and $211,000 in CNC horizontal lathes from a Kosdaq-listed company.
 
The Korea JoongAng Daily confirmed with the ESCU the data on the three South Korean companies that either participated in the exhibition directly or through a Russian dealer's representative.  
 

The circled area shows the booth of Intervesp, the Russian distributor for a South Korean CNC lathe manufacturer, at the Metalloobrabotka-2025 in this photo captured from a YouTube footage of the exhibition. Two other booths at the fair also featured South Korean brands, either directly or through local distributors. [SCREEN CAPTURE]

One company executive, however, strongly denied any direct involvement in the Moscow fair.
 
"We stopped all sales to Russia in early 2024 and told our Russian dealer not to use our logo or display our machines," the executive, who asked for anonymity, told the Korea JoongAng Daily. "They acted independently."
 
The firm said it has severed ties with suspicious intermediaries and is strengthening internal compliance to prevent future breaches. The company director said that such associations could unfairly harm small- and medium-sized suppliers like his.
 
The other two companies have yet to respond to the Korea JoongAng Daily's request for comments.  
 

A Russian Iskander-E tactical ballistic missile system performs during a dynamic display as part of the Army 2022 International Military and Technical Forum at Kubinka Air Base in Kubinka, Russia, on Aug. 17, 2022. [TASS/YONHAP]

 

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Aiding Russia’s war production

 

Advanced cutting tools are essential for shaping hardened alloys used in military hardware, including artillery gun barrels, rocket and missile casings and drone engines.
 
CNC lathes, on the other hand, are capable of high-precision machining of metal parts — for example, engine housings, shafts, nozzles, and mounts — with micron-level tolerances, critical for aircraft engine production and other aerospace applications, thereby directly contributing to Russia’s ability to build fighter jets and cruise missiles.
 
For instance, DN Solutions’ CNC machines were found to have reached Russia through Chinese intermediaries, and some of the equipment was later confirmed to have been installed inside Russian defense production facilities. 
 

Raw trade data provided by the Economic Security Council of Ukraine (ESCU) shows product shipments from a South Korean manufacturer to Russia via third countries such as Thailand and Uzbekistan. [SCREEN CAPTURE]

South Korea has aligned itself with the U.S. and EU export-control regimes since 2022.
 
The country operates a two-tier export screening system jointly managed by the Korea Customs Service and the Ministry of Trade, Industry and Resources. The customs service oversees customs classification and export declarations, while the ministry — with its affiliated Korea Strategic Trade Management Institute — is responsible for licensing and control of strategic items.
  
According to the Korea Customs Service, HS codes 8207, 8466 and 8458.11, which cover cutting tools and CNC machinery, are not automatically restricted. However, depending on their precision, specifications and potential end use, they may be designated as strategic materials requiring government approval before export.
 
Russia and Belarus are designated as situation-permit destinations, meaning all shipments that could be used in weapons production must obtain prior approval. 
 

The Ministry of Trade, Industry and Resources [NEWS1]

 

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Seoul faces pressure on evasion tactics

 

 
Despite the controls in place, government officials acknowledged that detecting indirect reexports through third countries is difficult, as intermediaries can disguise product origins or repurposed goods.
 
“Just as it’s impossible to search every passenger to prevent drug smuggling, it’s unrealistic to inspect every export shipment,” the customs official said. 
 
“Still, we are tightening joint investigations on unauthorized exports through an interagency export-control working group, and expanding outreach to small and medium-sized exporters through nationwide training sessions and compliance education," he added.
 
ESCU analysts say the issue is not always deliberate sanction evasion but a lack of compliance capacity among smaller manufacturers.
 
“We’ve seen similar patterns in countries like Germany, Italy and Switzerland — when major firms withdrew from the Russian market, smaller players stepped in to fill the gap," said Yurchenko. 
 
"In most cases, it's not about these companies being deliberate about supplying their products to Russia," she added, "but because that they are not doing proper transactional due diligence and compliance and they are not tracking the entire life cycle of their product from the moment it left the origin country to the moment it arrived at the final destination — whether it's Russia or somewhere else." 
 
Experts say limited manpower and oversight capacity make it difficult to detect illicit reexports.
  
“I wouldn’t say the system itself is flawed,” said Cheong In-kyo, professor of international trade at Inha University and former president of the Korea Strategic Trade Management Institute. “These shipments are legal at the time of export. They don’t go straight to Russia — they go legally to a third country first and are later transferred again. In reality, it’s tough for the authorities to detect and monitor every such case.”
 
Cheong added that the government needs to significantly increase staff and intelligence capacity to screen export destinations and review suspicious trade routes more closely.
 
“Right now, Korea simply doesn’t have enough manpower to manage this,” he added. “The United States has already expanded its work force to strengthen export-control intelligence, but in Korea, there hasn’t been any real increase yet.”

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]