What are secondary sanctions

Secondary sanctions are penalties imposed by the US, EU, or UK on non-US/EU/UK persons who conduct transactions with sanctioned parties or sectors — even where those transactions have no US, EU, or UK nexus. For Kazakhstan, the most significant secondary sanctions risk arises from OFAC’s Executive Orders 14024 and 14114, which authorise secondary sanctions against foreign financial institutions and entities that conduct or facilitate significant transactions with sanctioned Russian entities, sectors, or the Russian financial system.

OFAC EO 14024 and EO 14114 — Kazakhstan exposure

Executive Order 14024 (April 2021) authorises OFAC to impose blocking sanctions on non-US persons who materially support sanctioned Russian entities. EO 14114 (December 2023) added a new Section 11 to EO 14024, authorising secondary sanctions against foreign financial institutions that facilitate significant transactions involving Russia’s military-industrial base or SDN-designated persons. OFAC used this authority in January 2025 to designate a Kyrgyz bank involved in Russia sanctions evasion — establishing a direct regional precedent for Central Asian financial institutions. A Kazakhstan company that trades with, finances, or provides services to an OFAC SDN-listed Russian entity risks being designated under EO 14024 — and losing access to the US financial system and USD correspondent banking.

EU sanctions circumvention — Article 8a

The EU’s Russia sanctions include anti-circumvention provisions that prohibit EU persons from participating in activities designed to circumvent EU sanctions. From the 8th package (2022) onwards, EU sanctions also impose due diligence obligations on EU companies trading with partners in third countries identified as high circumvention risk — including Kazakhstan. EU companies trading through Kazakhstan entities must conduct enhanced due diligence on the ultimate destination of goods and services.

UK secondary sanctions — February 2025

In February 2025, the UK used new designation powers to sanction entities in Kazakhstan, China, India, Germany, and Turkey identified as enablers and suppliers to the Russian defence sector. UK sanctions against non-UK persons are less broad than OFAC secondary sanctions in their direct reach, but create significant practical risk for entities seeking access to UK financial services, correspondent banking through UK-regulated institutions, or transactions with UK counterparties.

Correspondent banking — practical impact

The most immediate practical risk for Kazakhstan companies is correspondent banking. US-regulated banks acting as correspondents for Kazakhstan banks conduct sanctions screening on all transactions routed through them. A transaction that triggers a match against OFAC SDN, EU, or UK sanctions lists — even a false positive — may result in payment blocking, account review, or de-risking of the Kazakhstan bank relationship. Bond Stone advises on compliance frameworks designed to reduce correspondent banking risk.

Sanctions Screening — Trading Company

Secondary Sanctions · Kazakhstan · Trade

Advising a Kazakhstan trading company on OFAC and EU sanctions screening of its counterparty relationships — identifying SDN-list matches, assessing secondary sanctions exposure, and implementing a real-time counterparty monitoring protocol.

Correspondent Bank Query Response

Secondary Sanctions · Kazakhstan · Banking

Preparing a sanctions compliance response for a Kazakhstan company subject to a correspondent bank query — documenting KYC/CDD framework, trade flows, and counterparty screening results to demonstrate absence of sanctioned party relationships.

M&A — Target Sanctions Review

Secondary Sanctions · Kazakhstan · M&A

Secondary sanctions due diligence on a Kazakhstan M&A target — reviewing counterparty relationships, beneficial ownership, and trade flows against OFAC SDN, EU Consolidated, and UK sanctions lists, and assessing post-acquisition compliance obligations.