The Council of the European Union approved on October 23 its 19th package of sanctions against Russia, including a subsidiary of a Russian bank in Kazakhstan.
Besides a key ban on Russian LNG imports and a ban on insurance for Russian aircraft and ships for the first five years after sale to a third country, the EU introduced a number of financial restrictions.
The latest financial bans include: a full ban on transactions with five Russian banks and expanded restrictions on Russian electronic payment systems, including Mir, as well as sanctions on four banks in Belarus and Kazakhstan; and restrictions on transactions with five banks, one crypto exchange, and two oil trading companies in Tajikistan, Kyrgyzstan, Paraguay, UAE, and Hong Kong.
Concerning Kazakhstan, the only bank included in the list was VTB, the local subsidiary of the St. Petersburg-registered bank. According to the EU regulation, “it shall be prohibited to engage, directly or indirectly, in any transaction,” with VTB (Kazakhstan).
Once a mid-sized bank, since the start of Russia’s war in Ukraine, VTB has lost customers and its value shrank. It now ranks third-to-last in assets in Kazakhstan.
Yerulan Zhamaubayev, the Central Bank’s deputy chairman, told the press that the regulator will now assess the bank’s client base and the overall impact of the sanctions on its financial stability.
“I don't think this will cause any serious concerns or risks for the economy,” Zhamaubayev said.
VTB (Kazakhstan) had been listed in the US sanctions list since July 2022.
On October 22, the US Treasury Department issued a fresh batch of sanctions against Russian entities, in particular oil companies Rosneft and Lukoil. The list of sanctioned assets, however, did not include Lukoil’s Kazakhstan assets, in a similar decision to the British government’s fresh sanctions list published in mid-October.
Despite repeated efforts during the years since the start of the war, the sanctions regime has not fully succeeded in stopping dual-use goods, corporate deals, and financial flows from crossing borders, also through Kazakhstan.
With reporting by Nazerke Kurmangazinova and Tamara Vaal.
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