Kazakhstan’s prompt reaction to U.S. warning of Russia-related sanctions

A prominent financial institution in Kazakhstan has declared it will limit its interactions with Russian and Belarusian citizens, just one day after a top U.S. government official warned that corporations and banks in Kazakhstan might face the consequences if found to be helping Russia to avoid sanctions.

Halyk Finance, based in Almaty, announced in a statement on April 26 that it had made its decision after orders from the Kazakhstan Stock Exchange.

The financial services provider stated that it would not support Russians and Belarusians who wish to trade non-Kazakh tenge-denominated foreign assets on the KASE, Eurasia.net reported.

It appears to be an instantaneous reaction to statements made by Elizabeth Rosenberg, the assistant secretary for Terrorist Financing and Financial Crimes at the U.S. Treasury Department, during a roundtable on April 25 in Astana.

According to Rosenberg, quoted by local media, secondary sanctions related to anti-Russian punishments for the war against Ukraine pose a growing risk to Kazakh enterprises. To prevent any repercussions from Russian attempts to get over those sanctions and export control procedures, the U.S. government is in frequent contact with Astana.

When questioned about Rosenberg’s comments by reporters, Madina Abylkassymova, the head of the government’s financial market regulator, stated that all secondary banks and financial services providers in Kazakhstan had greatly improved their compliance protocols.

“All requirements are being respected. The main concern is that the financial system shouldn’t be used to evade sanctions when trading transactions are taking place. We are taking all necessary precautions to reduce the possibility of secondary sanctions being imposed on Kazakhstan’s financial industry. All of the specifications put forward by European regulators have been followed, according to Abylkassymova.

This week, Rosenberg traveled to Kazakhstan as part of a more extensive campaign by Washington to pressure some of Moscow’s closest allies to prevent any easing of the economic pressure from Western sanctions on Russia.

Closing Russia’s access to the kind of dual-use technology that could support its military assault in Ukraine is another goal on the agenda.

Investigations revealed that Russia buys microchips through Kazakhstan and Armenia to develop cruise missiles.

The American representative who visited Kazakhstan, Matthew Axelrod, the assistant secretary for export enforcement at the Bureau of Industry and Security, praised what he called a continuing and effective effort to reduce Russia’s military capabilities. However, he pointed out that places like Kazakhstan are used as transfer hubs for illegal supplies. U.S. authorities have also named Armenia a key pathway for Russia to transfer restricted technologies.

Axelrod stated, in statements translated into Russian by Kazakh media, “We are prioritizing items such as computer chips, as well as elements used in integrated electronic systems needed for Russian missiles and drones.” We’re referring to specific computer components used by the Russian military machinery to control and direct missiles and drones that killed civilians and soldiers on Ukrainian soil. I want to be clear that it is a blatant export control violation for Kazakhstan to supply such items to Russia.

Since the beginning of the war in Ukraine, Axelrod allegedly estimated the value of the reexport of prohibited goods through Kazakhstan to Russia to be in the “millions of dollars.”

According to the New York Times, US and EU officials detected a “surge” in electronic components being delivered to Russia that was “deemed as critical to the production of weapons, including Russian cruise missiles.”

It has now been proven that Russia has continued to be able to obtain high-tech components created abroad since the beginning of its invasion of Ukraine. Conflict Armament Research, an investigative group with offices in the U.K., claimed in a study released earlier this month that it had “identified more than 150 non-Russian firms responsible for the manufacture of thousands of parts documented in Russian weapons” used in Ukraine.

Conflict Armament Research, an independent company investigating Russian weaponry retrieved from the battlefield, released a paper on April 18 revealing the first documented example of Russia producing weapons with chips made after the invasion began.

According to the documents from the March meeting, US and EU officials are growing concerned that Russia is gaining American and European goods by redirecting them through Armenia, Kazakhstan, and other Central Asian countries.

As a result, Western nations must create methods to promptly identify and penalize corporations and governments that assist Russia in producing weapons. Previously, the EU Council designated sanction evasion as a crime.

Read also: How Russia works around sanctions to procure microchips for missiles

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