Secondary Sanctions Risk in Kazakhstan

What are secondary sanctions

Secondary sanctions, in the usual sense, are measures against non-US persons for dealings with sanctioned parties or sectors, even where the dealing has no US nexus. The EU and UK act mainly by listing third-country persons and through anti-circumvention rules binding their own persons. For Kazakhstan, the main risk arises from Executive Orders 14024 and 14114: the first allows designation of those who materially assist sanctioned parties, and the second targets foreign financial institutions.

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

The EU's Russia sanctions include anti-circumvention provisions that prohibit EU persons from participating in activities designed to circumvent EU sanctions. EU companies trading through Kazakhstan should expect to carry out enhanced due diligence on the ultimate destination of goods and services.

UK designations — February 2025

In February 2025, the UK sanctioned 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.