KYRGYZSTAN — Eldik Bank and ABank, state-owned banks in Kyrgyzstan, have ended relationships with approximately 131 companies and are investigating another 80 companies. Approximately 17,000 transactions were deemed suspicious and submitted for investigation by the two banks, which conduct daily screening of clients and payments against sanctions lists from the European Union, the United States, and the United Kingdom.

The Ministry of Justice in Kyrgyzstan ordered 50 companies registered in the country to close. This occurred after the European Union adopted its 20th package of sanctions in late April 2024, which included an anti-circumvention tool specifically targeting Kyrgyzstan.

David O'Sullivan, the EU's sanctions envoy, traveled to Kyrgyzstan in February 2024. During his visit, O'Sullivan stated, "Trade flows suggest that some goods are being imported into Kyrgyzstan with the sole purpose of being re-exported to Russia, in breach of our sanctions." He added, "What is disturbing for us is the fact that there has been a significant and very noticeable percentage, a big increase in the percentages of your imports and re-export of these products compared to the pre-war period."

O'Sullivan clarified that the EU was not asking Kyrgyzstan to cease trading with Russia. "We are not asking Kyrgyzstan not to have trading relations with Russia. We only ask that that trading relationship does not involve the deliberate circumvention of our sanctions by the transmission through Kyrgyzstan of sanctioned EU goods to Russia," O'Sullivan said. Bakyt Sydykov, the minister of economy and commerce and the Kyrgyz president's special representative for sanctions policy, chairs working meetings on sanctions policy. President Sadyr Japarov denies accusations that Kyrgyzstan has facilitated the circumvention of international sanctions on Russia.

Why It Matters

The cessation of relationships with 131 companies and the ongoing investigations into 80 others by state-owned banks indicate increased enforcement of international sanctions in Kyrgyzstan. This development follows a specific anti-circumvention tool included in the EU's 20th sanctions package and a diplomatic visit by the EU sanctions envoy in February 2024, during which concerns about re-exportation of sanctioned goods to Russia were raised. More than 30 Kyrgyzstan-registered companies, along with banks like Keremet Bank and Kapital Bank, have been added to sanctions lists by the EU, U.S., and U.K.