Central Asia’s Crucial Role in Russia's Evasion of Sanctions in Report 2024 - 2025

The “Russia’s Sanctions Evasion Report 2024 — 2025” exam­ines how Russia has adapt­ed its strate­gies to evade inter­na­tion­al sanc­tions through var­i­ous part­ner­ships, par­tic­u­lar­ly with nations in Central Asia, the Caucasus, Turkey, and China. The report out­lines key find­ings, rec­om­men­da­tions, and a detailed analy­sis of sanc­tions’ impact, respons­es, and meth­ods employed by Russia to cir­cum­vent restric­tions. It also dis­cuss­es the roles of dif­fer­ent coun­tries in facil­i­tat­ing or obstruct­ing these eva­sion tactics.

The key findings regarding Russia’s sanctions evasion strategies include

Russia’s Sanctions Evasion Strategies (2024–2025)

• Russia con­tin­ues to cir­cum­vent inter­na­tion­al sanc­tions through part­ner­ships with Central Asia, China, Turkey, the Caucasus, and oth­er third-par­ty nations.
• Despite inter­na­tion­al efforts to close vul­ner­a­bil­i­ties, Russian-linked busi­ness­es exploit alter­na­tive trade routes to access crit­i­cal resources.

Key Transit Hubs Facilitating Sanctions Evasion

• China acts as a cen­tral play­er, using Central Asia as a con­duit for dual-use goods, spare parts, and mil­i­tary resources. China facil­i­tates cross-bor­der pay­ments and trade in sen­si­tive goods, sup­port­ing Russia’s sanc­tion evasion.
• Turkey, despite its NATO mem­ber­ship, remains a crit­i­cal con­duit for Russian goods and finan­cial transactions.
• Kazakhstan, Kyrgyzstan, Uzbekistan, Georgia, and Armenia play piv­otal roles in rerout­ing sanc­tioned goods to Russia. Caucasus Nations used to obscure the ori­gin of imports, ensur­ing con­tin­ued access to restrict­ed goods.
• Russia lever­ages its exten­sive resource base, includ­ing oil, gas, steel, alu­minum, and rare-earth min­er­als, but still relies on exter­nal sources such as Kazakhstan for addi­tion­al materials.

Role of Russian Oligarchs and Financial Networks

• Russian-affil­i­at­ed oli­garchs in Central Asia facil­i­tate Russia’s access to mar­kets and resources.
• Russian enti­ties engage with finan­cial insti­tu­tions in Central Asia to bypass sanctions.

Russia’s Military Supply Chain and Procurement Tactics

• Russia’s defense indus­try is sus­tained by covert pro­cure­ment net­works and repur­posed civil­ian industries.
• Russia seeks high-tech com­po­nents, includ­ing semi­con­duc­tors and drone tech­nol­o­gy, from China, Iran, and North Korea despite Western restrictions.
• Western-made microchips and dual-use tech­nolo­gies con­tin­ue to reach Russia through inter­me­di­ary nations, fuel­ing mil­i­tary operations.

Expansion of International Mechanisms for Sanctions Evasion

• The Eurasian Economic Union remains a key facil­i­ta­tor of sanc­tions eva­sion. o Russia suc­cess­ful­ly expands BRICS mem­ber­ship in 2024, poten­tial­ly using it
• as an alter­na­tive trade bloc to bypass restrictions.
• Russian ener­gy lever­age influ­enced European deci­sion-mak­ing, par­tic­u­lar­ly in Germany, Hungary, and Slovakia.

Cryptocurrency as a Tool for Sanctions Evasion

• Russia increas­ing­ly uti­lizes cryp­tocur­ren­cy to obscure trans­ac­tions and bypass bank­ing restric­tions (Iran, North Korea, China, Kazakhstan, and Kyrgyzstan).

As the geopo­lit­i­cal land­scape shifts in the wake of sanc­tions against Russia, Central Asian coun­tries have emerged as key play­ers in sup­port­ing the Kremlin’s efforts to evade these restric­tions. A recent report from the Center for Global Civic and Political Strategies under­scores the increas­ing sig­nif­i­cance of nations like Kazakhstan, Kyrgyzstan, Uzbekistan, Georgia, and Armenia in facil­i­tat­ing trade and finan­cial trans­ac­tions that enable Russia to cir­cum­vent inter­na­tion­al sanctions.

Russia’s reliance on Central Asia has notably inten­si­fied since the onset of sanc­tions fol­low­ing its inva­sion of Ukraine. These nations, strate­gi­cal­ly sit­u­at­ed between Russia and more eco­nom­i­cal­ly pow­er­ful regions, have become vital chan­nels for sanc­tioned goods and ser­vices, allow­ing the flow of crit­i­cal resources into Russia. This dynam­ic is par­tic­u­lar­ly salient as oth­er regions enforce stricter mea­sures, com­pelling Russia to adapt and seek alter­na­tive routes for acquir­ing essen­tial materials.

Kazakhstan, often viewed as a linch­pin in this net­work, has lever­aged its geo­graph­ic prox­im­i­ty and eco­nom­ic ties to Russia to bol­ster trade rela­tions. While the state has pub­licly sup­port­ed glob­al sanc­tions, numer­ous busi­ness­es have cap­i­tal­ized on Russia’s needs, facil­i­tat­ing the trans­fer of goods and resources. Companies like KazTransOil and KazMunayGas have been iden­ti­fied as play­ing vital roles in the ener­gy sec­tor, pro­vid­ing oil and gas sup­plies that are cru­cial for Russia’s con­tin­ued ener­gy operations.

A notable exam­ple involves the Kazakh ex-President Nursultan Nazarbayev’s fam­i­ly, par­tic­u­lar­ly his son-in-law, Timur Kulibayev.³⁶ Kulibayev’s oil trad­ing com­pa­ny, Vitol, has been impli­cat­ed in sell­ing sub­stan­tial vol­umes of oil to Western mar­kets, with alle­ga­tions that Russian oil is trans­port­ed through the Caspian Pipeline Consortium (CPC) pipeline, mixed with Kazakh oil, and sub­se­quent­ly reach­es Western mar­kets. The Netherlands has ini­ti­at­ed inves­ti­ga­tions into Timur Kulibayev’s oil trad­ing oper­a­tions. The Dutch Public Prosecution Service (OM) is report­ed­ly exam­in­ing Vitol for poten­tial bribery activ­i­ties in Kazakhstan.³⁷ Additionally, the UK’s House of Commons has request­ed infor­ma­tion from the Serious Fraud Office regard­ing these mat­ters. These devel­op­ments high­light the ongo­ing scruti­ny of inter­na­tion­al oil trad­ing prac­tices and their poten­tial links to sanc­tioned entities.

Kazakhstan’s Nurbank has become the first finan­cial insti­tu­tion in the coun­try to join the Russian mon­ey trans­fer sys­tem Kwikpay. This part­ner­ship enables fee-free bi-cur­ren­cy trans­fers and comes amid chal­lenges faced by Zolotaya Korona, a Russian pay­ment sys­tem wide­ly used in Kazakhstan, which sev­er­al major Kazakhstani banks stopped sup­port­ing after its devel­op­er was sanc­tioned by the U.S. Kwikpay, reg­is­tered in 2019 but active since August 2023, has been expand­ing inter­na­tion­al­ly, allow­ing trans­fers to mul­ti­ple coun­tries, includ­ing Armenia, Turkey, and Kyrgyzstan. The com­pa­ny is owned by Irina Khellmikh, with CEO Yuri Mindrin also linked to oth­er businesses. 

Nurbank, found­ed in 1992 and head­quar­tered in Almaty, has his­tor­i­cal ties to Kazakhstan’s polit­i­cal elite. In the 2000s, Nurali Aliyev, the grand­son of for­mer President Nursultan Nazarbayev, served as the bank’s deputy chair­man and lat­er as chair­man of the board of direc­tors. His moth­er, for­mer Senate Deputy Dariga Nazarbayeva, was also involved in the bank’s board. Currently, JP Finance Group, con­trolled by busi­ness­man Eldar Sarsenov, holds an 86.4% stake in Nurbank. With Zolotaya Korona pre­vi­ous­ly han­dling around 80% of inter­na­tion­al mon­ey trans­fers from Kazakhstan, Nurbank’s move to Kwikpay marks a sig­nif­i­cant shift in the country’s finan­cial land­scape, poten­tial­ly reflect­ing broad­er eco­nom­ic and geopo­lit­i­cal realignments.

Oligarchs use com­plex off­shore finan­cial struc­tures to obscure the ori­gins of their wealth and cir­cum­vent sanc­tions. Financial hubs like Cyprus, the Cayman Islands, and Switzerland are often used for these purposes. 

Kazakh and Russian oli­garchs have a his­to­ry of intri­cate finan­cial col­lab­o­ra­tions, often involv­ing com­plex off­shore struc­tures to man­age and obscure their wealth. A notable exam­ple is the Eurasian Resource Group, the for­mer Eurasian Natural Resources Corporation (ENRC), found­ed by three Kazakh oligarchs—Alexander Mashkevich, Patokh Chodiev, and Alijan Ibragimov. 

Polymetal, Russia’s sec­ond-largest gold pro­duc­er, under­went sig­nif­i­cant changes in its struc­ture due to sanc­tions and the evolv­ing geopo­lit­i­cal land­scape. The com­pa­ny delist­ed from the London Stock Exchange, re-list­ed in Kazakhstan, and sold its Russian assets to Mangazeya, a com­pa­ny con­trolled by unsanc­tioned Russian oli­garch Sergey Yanchukov.

This move reflects the broad­er exo­dus of Western investors from the Russian gold sec­tor, although some for­eign investors, includ­ing Kazakh oli­garchs Oleg Novachuk and Vladimir Kim, have retained con­trol of key assets, par­tic­u­lar­ly the Baimskoye gold project. To cir­cum­vent sanc­tions, Novachuk and Kim cre­at­ed a new com­pa­ny, Trianon Ltd., which acquired Baimskoye from their Kazakh firm, KAZ Minerals, with approval from Russian President Vladimir Putin.

Kyrgyzstan also plays a crit­i­cal role, serv­ing as a key tran­sit point for Russian-linked dig­i­tal asset trans­fers and enabling the obscur­ing of trans­ac­tions. Notable indi­vid­u­als such as Sadyr Japarov, the President of Kyrgyzstan, have been involved in nav­i­gat­ing the com­plex­i­ties of these rela­tion­ships, while busi­ness­es like KyrgyzTransOil assist in the seam­less move­ment of goods.

This part­ner­ship not only aids Russia in main­tain­ing access to inter­na­tion­al mar­kets but also demon­strates how Central Asian states are posi­tion­ing them­selves as essen­tial allies in the face of glob­al eco­nom­ic pres­sures.
Uzbekistan’s involve­ment in this intri­cate web can­not be over­looked, either. Companies such as Uzbekneftegaz active­ly engage in ener­gy trade with Russia, pro­vid­ing nec­es­sary resources that cir­cum­vent direct sanc­tions. This part­ner­ship illus­trates the will­ing­ness of Central Asian economies to engage with Russia, pri­or­i­tiz­ing eco­nom­ic gain over adher­ence to inter­na­tion­al restrictions.

Georgia and Armenia fur­ther con­tribute to this sanc­tions eva­sion land­scape, act­ing as con­duits that obscure the ori­gins of imports. Businesses in Georgia, such as Georgian Oil and Gas Corporation, and Armenian firms like Armenian Energy Company, facil­i­tate the rerout­ing of goods, ensur­ing that restrict­ed items con­tin­ue to flow into Russia, thus solid­i­fy­ing their role in sus­tain­ing Russian mil­i­tary oper­a­tions and eco­nom­ic resilience.

Furthermore, influ­en­tial fig­ures such as Mikhail Fridman, a promi­nent Russian oli­garch with ties to Central Asia, and Alexander Lebedev, a busi­ness­man with inter­ests in sev­er­al Central Asian indus­tries, exem­pli­fy the inter­con­nect­ed­ness of busi­ness­es and polit­i­cal influ­ences that fos­ter sanc­tions eva­sion efforts.

While these Central Asian coun­tries nav­i­gate their rela­tion­ships with Russia, the report empha­sizes the dual nature of their engage­ment. On one hand, they seek sta­bil­i­ty and eco­nom­ic growth through these part­ner­ships; on the oth­er, they risk alien­at­ing them­selves from inter­na­tion­al mar­kets that could impose reper­cus­sions for their com­plic­i­ty in Russia’s sanc­tions eva­sion tactics.

The intri­cate net­work of alliances formed between Russia and Central Asia serves as a press­ing reminder of the chal­lenges faced by the inter­na­tion­al com­mu­ni­ty. As the report illus­trates, this coop­er­a­tion not only pro­longs the con­flict in Ukraine but also com­pli­cates diplo­mat­ic efforts to iso­late Russia economically.

Moving for­ward, it is essen­tial for glob­al pol­i­cy­mak­ers to close­ly mon­i­tor these devel­op­ments and devise com­pre­hen­sive strate­gies to address the inter­con­nect­ed­ness of Central Asia with Russia. Understanding the moti­va­tions of Central Asian nations and the nature of their part­ner­ships will be cru­cial in for­mu­lat­ing effec­tive mea­sures to coun­ter­act Russia’s eva­sion of sanc­tions and uphold inter­na­tion­al norms.

In this devel­op­ing sce­nario, the role of Central Asia stands out as a piv­otal ele­ment in the ongo­ing strug­gle against sanc­tions eva­sion, high­light­ing the neces­si­ty for a coor­di­nat­ed inter­na­tion­al approach to keep these nations from becom­ing enablers of trans­gres­sions against glob­al order.

Read the full report: