Russian-origin barrels via AZ/KZ refinery routing. The pattern Treasury has flagged five times running.

A broker claims to source 'legal Russian oil' via Azerbaijani or Kazakh refineries, citing a 'temporary US renewable waiver' or 'Treasury safe harbor' that does not exist. The paper claims neutral origin; the barrels were lifted at Novorossiysk or Primorsk three weeks earlier. The pattern is the exact mechanism OFAC's Russian Harmful Foreign Activities Sanctions Regulations + the G7 price cap target. Banks that finance these deals get on the OFAC SDN list.

Pattern: origin-launder via AZ/KZ refinery·Regulator concern: OFAC Directive 4 · OFSI · G7 price cap·Severity: confirmed (sanctions exposure)

TL;DR

A broker pitches Russian-origin product (typically crude or fuel oil) routed through an Azerbaijani SOCAR refinery or a Kazakh KazMunayGas refinery, claiming the routing makes the barrels “non-Russian origin” for sanctions purposes. It does not. OFAC, OFSI, and EU sanctions guidance all treat origin-laundering through a non-sanctioned refinery as the same prohibited transaction if the underlying barrels originated in Russia. The G7 price cap explicitly addresses this routing. Banks that finance these cargoes face SDN listing. Three signals catch the pattern reliably.

The three signals

What gives the pattern away

A 'temporary waiver' or 'safe harbor' that doesn't exist

OFAC has not issued any US-renewable-energy carve-out for Russian-origin barrels. OFSI has not issued any UK price-cap exemption for re-refined Russian product. If a counterparty cites either, ask for the published General License number. There isn't one.

Loadings at Novorossiysk or Primorsk three weeks before 'refinery output'

AIS tracking is public. A barrel that loaded in Novorossiysk on the 1st and is being pitched as Kazakh refinery output on the 22nd hasn't undergone any meaningful refining process — just a port-to-port transit. The transaction sequence in the bill of lading collapses the claim.

AZ/KZ refinery routing claims with no surveyor witness

Real Azerbaijani or Kazakh refinery output ships with SGS, Intertek, or Bureau Veritas pre-shipment inspection certificates that document the loading terminal, batch number, and surveyor name. Laundered cargoes carry copy-paste certificates with the surveyor field blank.

What's actually published

The regulatory references your counterparty cannot cite

OFAC Directive 4 under Executive Order 14024 prohibits US persons from engaging in transactions with the Central Bank of Russia. Refined products derived from CBR-financed Russian crude inherit the sanctions exposure — there is no neutralization through intermediate refining.
G7 price cap (Regulation No 833/2014, as amended) on Russian-origin crude and petroleum products is explicit: re-refining or blending Russian-origin barrels in a third-country refinery does NOT transform the origin status for price-cap purposes. The Commission published this guidance in February 2023; it has been reaffirmed every six months since.
OFSI General Guidance on the Russia (Sanctions) (EU Exit) Regulations 2019 tracks the same logic. UK persons facilitating origin-laundering face civil monetary penalties + potential criminal referral.
EU Commission Notice on the implementation of the Russian oil price cap (October 2023) explicitly addresses AZ/KZ refinery routing as a known evasion pattern subject to enforcement.

The point is not that your compliance officer needs to memorize this — the point is that none of the cited “waivers” or “safe harbors” a broker mentions can be substantiated against the actual published guidance. Ask for the regulation number. They cannot produce one.

The API call

The same pattern, surfaced via /api/v1/regulatory/check

OilFlow’s Regulatory Matrix API returns the live sanctions posture for Russian-origin product across 79 jurisdictions. Bank compliance teams call this at counterparty intake so the SOCAR / KazMunayGas routing claim is flagged before the LC opens.

curl -H "Authorization: Bearer $KEY" \
  "https://oilflow.us/api/v1/regulatory/check?product=crude&country=RU"

{
  "ok": true,
  "data": {
    "allowed": false,
    "status": "blocked",
    "blockers": [
      "OFAC Directive 4 — Russian-origin crude subject to G7 price cap",
      "EU Regulation 833/2014 Annex XXI — embargo on Russian-origin crude",
      "UK SI 2019/855 as amended — UK person prohibition + price cap"
    ],
    "rerouting_warning": "Re-refining via third-country refinery does NOT change origin for sanctions purposes. See EU Commission Notice on price cap implementation."
  }
}

Catch this at intake

Sanctions-laundering exposure is a board-level risk.

The Regulatory Matrix API ($99–$999/mo self-serve) flags AZ/KZ refinery routing claims at counterparty intake against the live sanctions matrix. For full counterparty due diligence including beneficial-ownership traversal and adverse-media monitoring, the KYC-as-API ($25/screen PAYG) runs the seven-step pipeline.