Secondary sanctions — what they mean for Kazakhstan entities

US, EU, and UK sanctions against Russia are primarily directed at Russian entities and individuals. However, secondary sanctions provisions — particularly OFAC’s Executive Order 14024 and EO 14114 — extend to non-US persons who conduct or facilitate “significant transactions” with sanctioned Russian entities. A Kazakhstan company that trades with, finances, or provides services to a sanctioned Russian entity may face US secondary sanctions exposure — including loss of access to the US financial system, even without any US nexus to the transaction. Bond Stone advises on identifying and managing this exposure.

EU sanctions circumvention — Kazakhstan in scope

The EU’s Russia sanctions packages — from the 7th package (2022) onwards — include provisions targeting third-country entities that facilitate circumvention of EU sanctions. Kazakhstan has been specifically identified, with Kazakhstani companies included in EU sanctions lists for alleged involvement in supply networks for dual-use goods and restricted technology. EU sanctions obligations extend directly to EU-registered entities transacting with such Kazakhstani counterparties and, through due diligence requirements, create compliance obligations for any company with EU exposure trading through Kazakhstan.

Correspondent banking — the practical enforcement mechanism

The most immediate practical risk for Kazakhstan companies is correspondent banking. US and European correspondent banks — whose relationships with Kazakhstan banks are essential for USD and EUR payment processing — conduct sanctions screening on transactions routed through them. A Kazakhstan company with inadequate sanctions compliance, or a transaction that triggers screening flags, may find its payments blocked, its accounts reviewed, or its banking relationships terminated. Bond Stone advises on structuring transactions and compliance frameworks to reduce correspondent banking risk.

Kazakhstan’s own AML/CFT framework

Kazakhstan maintains its own AML/CFT regulatory framework under the Law on Countering the Legalisation of Illegally Obtained Money and Financing of Terrorism — administered by the Financial Monitoring Committee under the Ministry of Finance. Kazakhstan companies subject to AML/CFT obligations must conduct KYC/CDD on clients and counterparties, report suspicious transactions, and maintain beneficial ownership records. FATF assessments of Kazakhstan’s AML/CFT regime directly affect international banking relationships. Bond Stone advises on domestic AML/CFT compliance obligations alongside international sanctions risk management.

Sanctions Due Diligence — M&A Target

Sanctions · Kazakhstan · M&A

Sanctions screening and due diligence on a Kazakhstan M&A target — reviewing the target’s counterparty relationships, trade flows, and beneficial ownership against OFAC SDN, EU, and UK sanctions lists, and identifying transactions that could create secondary sanctions exposure for the acquirer.

Correspondent Bank Query — Trade Finance

Sanctions · Kazakhstan · Banking

Advising a Kazakhstan trading company responding to a correspondent bank query about its trade transactions — preparing a sanctions compliance response, documenting the company’s KYC/CDD framework, and demonstrating the absence of SDN-listed counterparty relationships to the bank’s compliance team.

Export Control — Dual-use Goods Assessment

Export Controls · Kazakhstan · Trade

Advising a Kazakhstan company importing industrial components on US EAR and EU dual-use goods classification — assessing whether goods require export licences, identifying BIS Entity List exposure among the company’s suppliers, and implementing an end-user screening protocol.

AML Compliance Programme — Financial Institution

AML/CFT · Kazakhstan · Financial Services

Advising a Kazakhstan non-bank financial institution on implementing a FATF-compliant AML/CFT programme — KYC/CDD policies, beneficial ownership identification, suspicious transaction reporting procedures, and staff training framework aligned with Kazakhstan’s Law on Countering Money Laundering.

Foreign Investor — Counterparty Screening

Sanctions · Kazakhstan · Foreign Investment

Advising a European investor entering Kazakhstan on sanctions screening of local counterparties — JV partner, suppliers, and government-adjacent entities — against OFAC, EU, and UK sanctions lists, and establishing an ongoing sanctions monitoring protocol as part of the investment compliance framework.

Secondary Sanctions Risk — Trade Advisory

Sanctions · Kazakhstan · Trade

Advising a Kazakhstan trading company on secondary sanctions exposure arising from its trade relationships — identifying transactions that could trigger OFAC or EU secondary sanctions risk, restructuring trade flows to reduce exposure, and implementing an ongoing sanctions compliance protocol.