At the end of January, the European Union intensified its sanctions against Russia, placing it on the list of countries with a high risk of money laundering and financing terrorism.
The sanctions came into effect on January 29 and imply stricter oversight by EU banks over all financial transactions related to the Russian Federation.
At a meeting at the Financial Monitoring Agency, Kazakhstan's President Kassym-Jomart Tokayev noted that the volume of hidden cash transit "in the interests of one of the neighboring countries" through one bank amounted to $14 billion. However, the actual amounts may be significantly higher.
At the same time, the European Parliament is discussing accelerating the implementation of the Middle Corridor, which involves Central Asia.
These events indicate significant changes on a continental scale — Europe and China are striving to create new mutually beneficial relationships. This is due to the fact that maritime logistics through the Black and Mediterranean Seas is becoming increasingly risky and expensive, while routes from China to Europe around Africa require considerable time and resources. If the Middle Corridor is implemented, the flow of financial logistics is likely to bypass countries like Kazakhstan and Armenia, which have become key players in circumventing European sanctions in recent years.
The question of which Central Asian country will take on the role of the financial center of the Middle Corridor is becoming increasingly relevant. European countries do not want to spend huge resources to contain Russian aggression while simultaneously supporting the Russian budget through Kazakh or Armenian companies linked to the Russian military machine. Armenia, having rejected Russian intervention in the Karabakh conflict, has begun to distance itself from Moscow and suspended its membership in the CSTO. Kazakhstan, in turn, is transferring entire sectors to its neighbors.
Against this backdrop, Kyrgyzstan has a chance to become a new center of financial logistics serving the main transport corridor of the continent, although it itself faces problems related to gray imports, sanctions against banks, and smuggling of sanctioned goods.
Brief Overview of the Situation in Kazakhstan
Nuclear Energy and the Influence of "Rosatom"All indications pointed to Kazakhstan becoming a key player in Central Asia in the global economy and an important hub for the corridor between Europe and China. However, the decision to build a nuclear power plant with a Russian contractor solidifies the country's dependence on Moscow in energy and technological matters, creating long-term obligations for decades to come. Furthermore, "Rosatom" is beginning to collaborate with private military companies that have ties to the Russian government.Internet in Kazakhstan and Dependence on RussiaThe former head of "Kazakhtelecom" left his post in June 2024 to become an advisor to the president. He was criticized for failing to ensure the laying of a cable that would bypass the censorship imposed by Russia, despite his multi-billion dollar fortune. Traffic from Kazakhstan passing through Russia is subject to filtering and slowing, which affects freedom of speech and access to information.
Oil Transit and Dependence on RussiaKazakhstan has historically depended on Russia for oil transit, and this dependence persists even 35 years after gaining independence. Criticism of this dependence has been voiced for many years.
Secret ties between Putin and Nazarbayev were discussed even by members of Nazarbayev's family shortly before his death. Changes in ownership of the oil sector did not lead to the creation of an independent export infrastructure.
According to the Ministry of Energy of Kazakhstan, in 2025, the import of petroleum products from Russia will resume, including 285,000 tons of gasoline and 450,000 tons of diesel fuel.
Moreover, inflation in Kazakhstan, which the country's presidents are struggling against, has a non-monetary nature, and the significant impact on the rise in prices for basic products is due to the increase in fuel prices. This factor is beyond the control of the government, despite demands from the heads of the National Bank.
Smuggling of Sanctioned Goods through Kazakhstan
Foreign trade statistics show a sharp increase in the supply of goods to Russia that are subject to sanctions: electronics, processors, and even equipment for the Russian military. Kazakhstan not only does not close these schemes but also becomes a convenient buffer for Russia on its way to the global market. In Kyrgyzstan, however, the situation is not without problems either.
Product Labeling and ControlThe product labeling system allows Russia to control the entire process of value addition in Kazakhstan. Previously sanctioned Russian entities, such as "Rostec," collected funds from Russian manufacturers through the "Center for the Development of Advanced Technologies," leading to increased final prices for goods. In Kazakhstan, labeling was lobbied by "Kazakhtelecom."
Financial System of KazakhstanAfter the introduction of international sanctions against the Russian financial system in response to the conflict in Ukraine, Kazakh banks pretended to comply with the restrictions.
Nevertheless, the volumes of supplies to Russia through Kazakh schemes show significant financial flows. The amount mentioned by Tokayev of $14 billion is merely the difference in trade statistics between Kazakhstan and China. Kazakhstan had the opportunity to become a modern financial center but chose easy and quick money, which made it dependent on international isolation. As a result, key sectors of Kazakhstan's economy are being transferred into the hands of Russian oligarchs.
Prospects for Kyrgyzstan on the International Stage
Sanctions against several state banks and statements by European officials regarding involvement in schemes with sanctioned goods are distancing Kyrgyzstan from the status of a civilized financial center.Nevertheless, Kyrgyzstan still has a chance to become a financial center similar to Hong Kong or Singapore, connecting two worlds.
Kyrgyzstan faces similar problems to Kazakhstan but with different outcomes.
Several examples can be cited, comparing the situation with the introduction of Russian sanctioned banks.
TSUPIS (Unified Center for Accounting and Transfer of Interactive Bets) was immediately denied implementation in Kyrgyzstan, unlike Kazakhstan, where the system was accepted despite opposition from deputies and financial regulators.
In Kazakhstan, banks that attempted to lobby this system found themselves under the threat of sanctions.
In November 2025, deputy Bakytzhan Bazarbek published a video claiming that ESU is a "cover" for companies linked to Russia, including Nomapay. An official from the Ministry of Sports confirmed that the system being implemented in Kazakhstan is an adapted Russian model.
In Kyrgyzstan, the operator of product labeling became "Alpha Telecom," however, control over it was sought by those close to the former president. Ultimately, the authorities decided to nationalize the company, which allowed them to maintain control over important information.
In recent months, sanctions against "Keremet Bank" and measures against Capital Bank and crypto networks have significantly impacted the country's reputation. However, these events have spurred improvements in banking procedures.
Kyrgyz banks have strengthened control over transactions and revised internal procedures to comply with international standards. They now check not only counterparties but also their real owners, which helps identify sanction evasion schemes. As a result, Kyrgyzstan's banking system has significantly improved its compliance with international standards.
The path that Kyrgyzstan has taken is one that Kazakhstan still has to traverse, as in light of the tightening sanctions against Russian financial institutions, three banks in Kazakhstan may find themselves under international restrictions for working with companies acting in the interests of Russian sanctioned organizations.
