The $184m loan that vanished from the balance sheet

FRHC Investigative Reporter
Published: October 26, 2025

Freedom Holding Corp (FRHC), a Nasdaq-list­ed finan­cial ser­vices group with deep roots in Kazakhstan, has built a cor­po­rate fortress around its con­trol­ling share­hold­er. While the com­pa­ny presents itself as a com­pli­ant US enti­ty, an analy­sis of its 2025 proxy state­ment reveals a gov­er­nance struc­ture where the CEO effec­tive­ly writes his own pay, and a $183m loan port­fo­lio that defies stan­dard bank­ing account­ing rules.

The doc­u­ment, filed with the US Securities and Exchange Commission (SEC) on July 29, expos­es how Timur Turlov, the com­pa­ny’s chair­man and chief exec­u­tive, lever­ages “Controlled Company” exemp­tions to bypass inde­pen­dent over­sight. More alarm­ing­ly for investors, it details a series of trans­ac­tions between FRHC and enti­ties owned by Mr Turlov that reg­u­la­tors in Washington and Astana may view as red flags for asset obfus­ca­tion and poten­tial sanc­tions evasion.

The ‘Controlled’ Loophole

The most strik­ing fea­ture of the proxy state­ment is the com­pa­ny’s explic­it reliance on Nasdaq Rule 5615 to clas­si­fy itself as a “Controlled Company.” With Mr Turlov hold­ing 42.4m shares—69.5 per cent of the out­stand­ing stock—the firm argues it does not need a major­i­ty of inde­pen­dent direc­tors on its key committees.

This legal tech­ni­cal­i­ty has pro­found con­se­quences. It allows Mr Turlov to sit on the Compensation Committee, which sets his own remu­ner­a­tion. In fis­cal 2025 alone, he received $7.5m in total com­pen­sa­tion, includ­ing a bonus of $4.3m, or 171 per cent of his base salary.

“The Board believes that it is in the best inter­ests of the Company… for Mr Turlov to serve as Chief Executive Officer and Chairman,” the proxy states. Yet, this con­cen­tra­tion of pow­er rais­es ques­tions about whether minor­i­ty share­hold­ers’ inter­ests are being pro­tect­ed against self-deal­ing, a clas­sic con­flict under US secu­ri­ties law.

The $183m Accounting Anomaly

The most con­tentious rev­e­la­tion con­cerns the acqui­si­tion of con­sumer loans by FRHC’s Kazakh sub­sidiary, Freedom Bank KZ. In March 2025, the bank pur­chased $183.6m in uncol­lat­er­alised retail loans from a relat­ed par­ty: Microfinance Organization Freedom Finance Credit LLP (FFIN Credit), an enti­ty con­trolled by Mr Turlov.

Under stan­dard bank­ing account­ing prin­ci­ples, such assets would appear as “loans receiv­able” on the bank’s bal­ance sheet, sub­ject to strict pro­vi­sion­ing for poten­tial defaults. Instead, the proxy state­ment reveals a star­tling exception.

According to the fil­ing, FRHC does not rec­og­nize these loans as stan­dard cus­tomer assets. Because FFIN Credit retains what the doc­u­ment calls “effec­tive con­trol” over the trans­ferred loans, they are record­ed on the con­sol­i­dat­ed bal­ance sheet mere­ly as “rights of claims for pur­chased retail loans.” This account­ing treat­ment effec­tive­ly keeps the risk pro­file of the loan book opaque to exter­nal audi­tors and investors, a move that crit­ics in Washington could inter­pret as an attempt to hide non-per­form­ing assets or engage in cir­cu­lar lending.

A Web of Related-Party Flows

The $183.6m loan pur­chase is just one node in a com­plex web of finan­cial flows between the pub­lic com­pa­ny and Mr Turlov’s pri­vate empire. The proxy state­ment dis­clos­es three oth­er sig­nif­i­cant trans­ac­tions, all con­duct­ed under the umbrel­la of “ordi­nary course” busi­ness but car­ry­ing high reg­u­la­to­ry risk:

• Brokerage Receivables: FRHC holds $29.7m in receiv­ables from ITS Central Securities Depository Limited, a sub­sidiary con­trolled by Mr Turlov.
• Customer Liabilities: Freedom Bank KZ held $6.2m in deposits for Turlov Family Office Securities (PTY) LTD, a whol­ly-owned bro­ker­age of the CEO.
• The Chess Federation: The com­pa­ny spent $11.2m on adver­tis­ing and spon­sor­ship for the Kazakhstan Chess Federation, where Mr Turlov holds a man­age­ment position.

While the com­pa­ny asserts these deals are at “arm’s length,” the sheer scale of cap­i­tal mov­ing between a US-list­ed enti­ty and pri­vate vehi­cles con­trolled by its dom­i­nant share­hold­er invites scruti­ny under the Foreign Corrupt Practices Act (FCPA) and Anti-Money Laundering (AML) statutes. 

Specifically, the lack of col­lat­er­al on the $183m loan port­fo­lio and the “effec­tive con­trol” clause could be viewed as a mech­a­nism to lay­er funds or obscure ben­e­fi­cial ownership—a tech­nique often flagged by FinCEN under the Bank Secrecy Act (31 U.S.C. § 5318).

The Regulatory Tightrope

For Freedom Holding Corp, the path for­ward is nar­row. By invok­ing “Controlled Company” sta­tus, FRHC has side­stepped the inde­pen­dent over­sight that typ­i­cal­ly acts as a buffer against self-deal­ing in US-list­ed firms. Yet, this exemp­tion does not shield it from the strict lia­bil­i­ty of US fed­er­al law regard­ing finan­cial report­ing and sanc­tions compliance.

If reg­u­la­tors deter­mine that the $183m loan pur­chase was struc­tured to bypass cap­i­tal ade­qua­cy rules in Kazakhstan or to con­ceal bad debt from share­hold­ers, FRHC could face enforce­ment actions under the Sarbanes-Oxley Act for fal­si­fy­ing books and records (15 U.S.C. § 78m(b)(2)). Similarly, if the under­ly­ing bor­row­ers of those loans are linked to sanc­tioned entities—a risk height­ened in the cur­rent geopo­lit­i­cal climate—the com­pa­ny could be found in vio­la­tion of the International Emergency Economic Powers Act (IEEPA).

A Vote on Trust

As share­hold­ers pre­pare to cast their bal­lots at the upcom­ing September 29 Annual Meeting, they face a stark choice. The Board rec­om­mends vot­ing “for” the re-elec­tion of Mr Turlov and the rat­i­fi­ca­tion of Deloitte LLP as audi­tor. They also rec­om­mend approv­ing the exec­u­tive com­pen­sa­tion pack­age that rewards the very man who con­trols the board.

The com­pa­ny’s defense is clear: it oper­ates in the com­plex mar­kets of Central Asia, where close ties between busi­ness and gov­ern­ment are the norm, not the excep­tion. “We val­ue our stock­hold­ers’ views,” the proxy states, not­ing a 96% approval rat­ing for exec­u­tive pay last year.

But as the dust set­tles on this inves­ti­ga­tion, the ques­tion remains: is the “Controlled Company” label a nec­es­sary adap­ta­tion to emerg­ing mar­ket real­i­ties, or a shield behind which finan­cial irreg­u­lar­i­ties can hide? For investors in Freedom Holding Corp., the answer lies not just in the num­bers on the bal­ance sheet, but in whether they trust the com­pa­ny’s asser­tion that these mas­sive relat­ed-par­ty flows are tru­ly at arm’s length.

An insid­er stat­ed: “All trans­ac­tions with relat­ed par­ties were con­duct­ed in the ordi­nary course of busi­ness, on terms sub­stan­tial­ly equiv­a­lent to those avail­able to the pub­lic, and have been ful­ly dis­closed in accor­dance with SEC regulations.”