Sanctions - The Times Of Central Asia

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Finance Russia Banking Export/Import Sanctions re-export

Kyrgyzstan Complicates Re-Export of Goods to Russia

Re-exporting goods to Russia from third countries through Kyrgyzstan are to become more expensive due to a new rule implemented by the National Bank of the Kyrgyz Republic (NBKR). The new protocol prohibits banks from making payments for goods intended for foreign countries without actual delivery to the territory of Kyrgyzstan. The rule came into force on September 25 and effectively closed the channel of transit payments for goods from third countries to Russia through Kyrgyzstan. The move is seen as a response to requests from international financial institutions. It might be instrumental in putting an end to Russia’s practice of avoiding Western sanctions imposed due to Russia's war in Ukraine. The new NBKR rule would also benefit the Kyrgyz economy, as re-exported goods must now be delivered to Kyrgyzstan and subject to Kyrgyz customs duties and taxes. According to Russian media reports, Russian importers have already encountered difficulties associated with the new requirement to transport goods through Kyrgyzstan, and the corresponding customs and tax costs, which makes re-export less profitable. The NBKR requirement does not extend to the Trading Company, established by the Cabinet of Ministers of the Kyrgyz Republic on August 23. Wholly state-owned, the company oversees trade flows involving Kyrgyz firms that re-export goods without physically delivering them to Kyrgyzstan. The Trading Company has the exclusive right to carry out trade operations without actual delivery to Kyrgyzstan. Companies that previously carried out trade without delivery to the Kyrgyz territory must carry out operations through the Trading Company. Also, the NBKR rule does not apply to deliveries made through e-commerce marketplaces for personal use.

money Sanctions Banking Finance

Kazakhstan’s Home Credit Bank Stops Working with Russian VTB Bank

Kazakhstan's Home Credit Bank has stopped its cooperation with the Russian VTB Bank because of the risk of secondary sanctions, Home Credit has reported. “In connection with international sanctions imposed on JSC DO Bank VTB Kazakhstan (VTB Kazakhstan), JSC 'Home Credit Bank' has decided to cease cooperation with VTB Kazakhstan to exclude the risks of secondary sanctions. In this regard, any transfer operations in tenge and foreign currency on customers' accounts to/from VTB Kazakhstan will be stopped,” the bank's statement read. VTB remains the only Russian bank with a subsidiary structure in Kazakhstan. Earlier, Sberbank and Alfa Bank sold their subsidiary banks in the country. The US, EU, and UK are enforcing sanctions on VTB. As of July 1, 2024, VTB Kazakhstan ranked 18th in assets among the country's 21 banks. Home Credit Bank Kazakhstan was previously owned by Home Bank, but fully exited the asset at the end of 2022. Home Credit Bank CEO Kirill Bachvarov explained that this was necessary to restore the bank's rating, as the link to the Russian shareholder negatively affected its position. In July 2024, the U.S. Treasury tightened sanctions against Russia, adding to the list of companies whose work with Russia could lead to risks of secondary sanctions, including VTB Kazakhstan.

Finance money tranfer Sanctions Banking Russia

National Bank of Kyrgyzstan Comments on Suspension of Money Transfers with Russia

In regard to the suspension by some Kyrgyz banks of money transfers between Kyrgyzstan and Russia, the National Bank explained to The Times of Central Asia that second-tier banks are working to prevent the negative impact of international sanctions. “To minimize the risk of secondary sanctions, measures are taken to strengthen control over clients and counterparties, to conduct thorough checks to ensure that they are not on the sanctions lists,” said representatives of the financial regulator, before adding that the National Bank is remotely supervising compliance with international sanctions. All commercial banks in Kyrgyzstan must check their counterparties in adherence to the policy “know your client,” and request documents from clients confirming the origin of funds. It should be noted that money transfers between Kyrgyzstan and Russia are still carried out through ruble details of other Russian banks, which have not fallen under sanctions. In addition, it is possible to transfer funds through money transfer systems. On June 12, 2024, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) added the Moscow Exchange, the Russian Center, and the National Settlement Depository National Cleari to its sanctions list. As a result, trading in the U.S. dollar and euro was halted at the Moscow Exchange. Then, eight commercial banks from Kyrgyzstan restricted their work to Russian money transfer systems. But after a few days, work with Russian-sanctioned banks was resumed. In April this year, Kyrgyzstan stopped accepting Russian MIR cards due to the risk of secondary sanctions. Later, the head of the Kyrgyz Cabinet of Ministers, Akylbek Japarov, said that once a processing center is created, they will continue to work with Russian banking systems. Currently, the Interbank Processing Center of Kyrgyzstan is serviced by a Latvian company providing work software.

EU Sanctions Sanctions Russia Banking Finance

Banks Suspend Transfers between Kyrgyzstan and Russia

More than a dozen banks in Kyrgyzstan have suspended money transfers to Russia to avoid falling under secondary sanctions, which could lead to blocked operations and loss of access to international financial markets. The list of banks involved includes large and regional institutions. By suspending transfers, the banks aimed to reduce risks associated with international payment systems such as SWIFT, which can be used to pressure financial institutions linked to Russia. The situation became more complicated after several Western countries began to monitor financial transactions related to Russia and apply sanctions to banks that continue such transactions. Nevertheless, some banks in Kyrgyzstan have found ways to maintain financial flows between the two countries by using transfers that are less dependent on international systems. For example, Optima Bank and Aiyl Bank employ alternative systems that are not subject to Western sanctions. Inter-country remittances play an essential role in the Kyrgyz economy, contributing to economic stability and supporting the well-being of many families. The imposition of restrictions could significantly impact the country, especially since numerous households in Kyrgyzstan depend on remittances from Russia for a significant portion of their income. In June, several banks in Kyrgyzstan suspended work with Russian money transfer systems amid the expansion of U.S. sanctions. At the time, Mbank explained that the temporary restriction was caused by “volatility of the exchange rate and possible sharp fluctuations in the currency market.” In addition to MBank, restrictions were imposed by Doscredobank, KICB, Keremet Bank, Kompanion Bank, RSK Bank, KCB Bank, and Bai-Tushum Bank, but later lifted by some to resume accepting transfers from Russia.

Russia Politics Sanctions International Transit

Kazakh Deputy Prime Minister Zhumangarin: Astana Will Not “Blindly Follow” Anti-Russian Sanctions

In an interview with Bloomberg, Kazakhstan's Deputy Prime Minister and Minister of Trade and Integration, Serik Zhumangarin said the country does not intend to “blindly follow” Western sanctions against Russia if they harm Kazakhstan's economy. According to Zhumangarin, Kazakhstan will comply with the sanctions, but will also consider the impact on the domestic market and the country's economic interests. The statement responded to the concerns of Kazakh entrepreneurs, who are already facing difficulties due to disruptions in trade chains and logistical problems caused by the sanctions. The Deputy Prime Minister emphasized that Western sanctions against Russia have caused disproportionate damage to his country. According to the official, Kazakh producers are suffering huge losses, while their former Russian customers have reoriented themselves to suppliers inside Russia and “continue to prosper.” Without the restrictions, “profits would have stayed in Kazakhstan,” the Deputy Prime Minister said. Instead, he said, they are now “going to those against whom” the West has imposed sanctions. The Kazakh Deputy Prime Minister noted that the sanctions imposed against Russia had already hurt Kazakhstan's economy. In particular, in terms of the breakdown of logistics chains and decreased exports to Russia, one of Kazakhstan's largest trading partners. Zhumangarin stated that Astana will continue to adhere to Western restrictions, but stressed that in the context of global instability, Kazakhstan is seeking to pursue a balanced policy to minimize the impact of sanctions at home and maintain stability in the domestic market. Kazakhstan adheres to an independent policy and continues to develop trade relations with other countries, such as Iran and China, Zhumangarin noted. In particular, Kazakhstan is studying the possibility of using routes across the Caspian Sea to expand trade to the south. Kazakhstan is also negotiating with Western countries to allow the sale of Kazakhstani goods to Iran, or to use the country for transit. Kazakhstan's position reflects its desire to maintain economic independence and minimize the risks associated with external sanctions. At the same time, Kazakhstan is currently complying with international rules and is in dialog with Western countries to find compromise solutions that will avoid further pressure on the economy. Thus, remaining faithful to its international obligations, Kazakhstan seeks to protect its national interests, maintain stability, and develop its economy in a difficult foreign policy environment.

Sanctions Extreme Sports

Intrigue Shadows a Rugged Motor Race with Central Asian Roots

Several vehicle crews from Turkmenistan are competing in the Silk Way Rally, a 5,243-kilometer race that started in Russia’s Siberian city of Tomsk on July 5 and will finish in Ulaanbaatar, Mongolia on July 15 after passing through mountain and desert terrain. The Russia-backed event has attracted scrutiny not just for the off-road adventure – its organizers face U.S. sanctions for allegedly helping Russian military intelligence. The annual Silk Way Rally, which comes at a time of high tensions between Russia and the West over the war in Ukraine, has a history of Central Asian involvement since it was first held in 2009. The initial route started in Kazan, Russia, went through Kazakhstan and finished in Ashgabat, the capital of Turkmenistan. After a few more route variations, the 2016 edition began in Red Square in Moscow and passed through Kazakhstan on the way to the finish in Beijing after an epic 10,735 kilometers. The race was canceled in 2020 because of the pandemic. The rally has had competitions for various categories, including trucks, cars, SSVs (Special Service Vehicles, of a type often used by police or firefighting units for difficult conditions at high speeds) and quad bikes, which are four-wheel, all-terrain vehicles. [caption id="attachment_20146" align="aligncenter" width="374"] silkwayrally.com[/caption] The rally, which purports to follow routes used by merchants on the so-called Silk Road network many centuries ago, is reminiscent of the renowned Dakar Rally in West Africa. It has recently come under suspicion as an alleged front for Russian operatives. Past winners and competitors in the Silk Way Rally have included people from France, Spain and other Western European countries, as well as Ukraine, Israel, Qatar, Saudi Arabia and Argentina. At least two dozen countries were represented in several editions of the annual race in previous years. This year, nationals from about half a dozen countries signed up and the vast majority are Russian, illustrating the impact of sanctions and the deterioration in ties since Russia’s full-scale invasion of Ukraine in 2022. Several two-member teams from Turkmenistan, including brothers Merdan and Shokhrat Toylyev, are competing in the T2 class of cross-country vehicles. A Kyrgyz citizen is listed with a Russian in a team in another vehicle category. The 2024 Silk Way Rally is not recognized by the Fédération Internationale de l'Automobile, also known by its initials FIA. The Paris-based governing body of motorsport has taken action to isolate Russia and its ally, the government in Belarus, since the Russian invasion of Ukraine. The race has caught the attention of the U.S. Department of the Treasury, which on June 12 said it was imposing sanctions on the organization and its directors for alleged ties to the Russian military intelligence agency GRU. The department said Silk Way head Bulat Akhatovich Yanborisov, a Russian citizen, had received awards from the GRU for his work and appears to use his properties in Europe as transit points for Russian military intelligence officers. “Bulat, who is Silk Way’s CEO and general director, alongside his son Amir Bulatovich Yanborisov (Amir),...