Russia is upset that commercial banks in Kazakhstan are exhibiting “excessive caution” in settling payments and extending loans involving companies doing business with Moscow. 

A report published by the Russian media outlet RTVI claimed that entities in Kazakhstan that do business with Russia are the victims of “over-compliance,” which hinders legitimate cross-border commerce. A major source of discontent is “the fact that Kazakh banks demand from their clients ‘letters of guarantee’ on the refusal to export finished products to Russia, under the threat of closing credit lines.” Some commercial banks simply refuse to process payments involving Russia, the report added. Others require exhaustive paperwork to complete transactions.

The bankers’ caution appears rooted in concern that lax compliance on potentially illicit trade could result in the imposition of secondary sanctions on banks, and possible disconnection from the SWIFT payment system. 

RTVI quoted an anonymous entrepreneur who complained bitterly about bankers’ vigilance when it comes to money moving between Kazakhstan and Russia. “This is a wave-like movement. As soon as we find options for settlements, after some point there is another tightening, and everything starts all over again,” the source told RTVI.

Several Kazakhstan-based firms operating on behalf of Russians have been slapped with sanctions for engaging in activity supportive of Russia’s war effort. The investigative outlet OCCRP published a piece in late 2023 showing how Kazakhstan has served as a critical conduit used by Russia to obtain dual-use items that help maintain the Russian war effort in Ukraine. Kazakh leaders, meanwhile, insist that the country abides by US and European Union sanctions.

Members of the Ak Zhol faction in the Kazakh parliament are said to have recently sent a letter to officials at the National Bank of Kazakhstan and other government agencies effectively asking that authorities lean on commercial bankers to loosen up their rules. The letter reportedly pointed out that Kazakh legislation does not specifically bar banks from handling transactions related to sanctions imposed by third countries, according to RTVI.

In a response, National Bank officials reportedly acknowledged that commercial banks have imposed a heavy burden on those seeking to do business with individuals or entities in Russia, but it added that it is not inclined to intervene, the RTVI report indicated. The National Bank affirmed that “the risk of secondary sanctions by foreign states” is a legitimate concern for commercial banks.