Wartime sanctions on Russia have sparked new smuggling opportunities for hot-ticket items like luxury Italian handbags and microchips

• Russia's war in Ukraine created new smuggling opportunities for the country's criminal underground.
• The most lucrative items to smuggle into the country are designer handbags, according to a new report.
• But more worrisome is smuggled sanctioned tech that can be repurposed for the military.

A reshuffling of the Russian criminal underworld amid the war in Ukraine has prompted new smuggling markets for sanctioned items ranging from designer handbags sought by affluent kleptocrats to spare tech parts critical to the country's defense machine, according to a new report.

Despite Western countries' ongoing efforts to cut off Russia from the outside world, market constraints have invariably created new opportunities for Russian mafia gangs to line their pockets, according to "Time of Troubles," a December 2023 report on the impact of the Ukraine war on Russia's underworld, written by top Russia watcher Mark Galeotti for the Global Initiative against Transnational Organized Crime.

Dozens of countries slapped Russia with harsh sanctions soon after Russia invaded Ukraine in February 2022, limiting exports of everything from luxury items to agricultural machinery.

Before the war, Russia accounted for anywhere from 1 to 3 percent of the world's luxury goods market, according to the report, which cited 2021 data.

Russian President Vladimir Putin worked hard in the early days of the war to convince citizens that the conflict would have little impact on their day-to-day lives, assuring Russians that those who wanted to bring in luxury goods would still be able to.

Nearly two years later, much of the country's cash-rich aristocratic class still has the funds to pay for designer goods, even as their once-legal methods of acquirement have dwindled. Their money is now fueling a new industry that the Russian mafia is more than happy to support, Galeotti said during a Monday presentation on the assessment.

The report cites a Europol analyst who said the most lucrative smuggling racket in Russia is currently sanctioned Italian designer handbags and other high-end accessories as the Russian rich try to maintain their lifestyle even in the face of war.

Hundreds of millions of dollars worth of luxury items — including champagne, watches, perfume, Rolls Royce cars, and designer fashion items from brands like Chanel and Louis Vuitton — were cleared for entry into Russia between March and August of 2022, according to a May 2023 i news report, which cited Russian customs declarations.

"Our research shows that despite the war, sanctions, and corporate boycotts, for those with the means to afford $1,700 bottles of cognac life in Russia continues uninterrupted," Lynn Hughes, an analyst for Import Genius, a US-based trade data company, told the outlet.

Meanwhile, a Russia-based online trader in Italian handbags told i news that she has no problem getting "whatever my customers want."

"The supply can take a week or two longer than before, but we can find it, no problem," she said.

Belarus — one of Russia's few remaining allies — has emerged as the crucial smuggling hub for illicit items into and out of the country, according to the report.

State-sanctioned smuggling

More dangerous than the influx of leather purses into Russia, however, is the bolstered smuggling market for sanctioned tech, Galeotti said Monday.

Western countries have used sanctions to try and starve Russia of domestic appliances and their spare parts, which can often be repurposed for military use, forcing the Kremlin to get directly involved in the underground smuggling game, according to the report.

Moscow is actively seeking gadgets and machinery valuable to its war effort such as microchips and mechanical parts included in common appliances like refrigerators and washing machines, Business Insider previously reported.

The state is now encouraging Russian gangs to ramp up this type of smuggling, incentivizing criminals to get the tech into Russia by any means necessary, according to the report.

One Europol analyst told Galeotti that criminals who are able to smuggle microchips into Russia will likely get a "blind eye" from the country's security service when it comes to any drugs, people, or other illicit items they hope to smuggle out.