Sanctions screening in Kazakhstan: how to check counterparties

Sanctions screening in Kazakhstan is a business necessity rather than a direct statutory duty for most companies. Kazakhstan has not adopted its own regime of economic sanctions against foreign states, and the only mandatory national lists are the terrorism-financing and proliferation lists kept under the AML/CFT Law. Yet every Kazakhstan bank screens payments against foreign sanctions lists, and a company that trades with Russian, Chinese, European or American counterparties can find a payment blocked, an account closed or a foreign partner walking away because of a counterparty it never checked. This article describes how to build a screening process that is proportionate, documented and defensible.

Kazakhstan's position in brief

Three points frame everything else.

1. No own sanctions regime. Kazakhstan does not maintain a list of sanctioned foreign persons of the kind kept by the United States, the European Union or the United Kingdom. Kazakhstan law does not require a company to refuse business with a person designated only under a foreign regime.
2. Mandatory national lists exist, but they are narrow. Articles 12 and 12-1 of the AML/CFT Law establish lists of persons connected with the financing of terrorism and extremism and with the financing of proliferation of weapons of mass destruction. Subjects of financial monitoring must freeze transactions of listed persons within 24 hours of publication. These lists are about terrorism and proliferation, not trade policy.
3. Banks apply foreign regimes anyway. Kazakhstan banks hold correspondent accounts abroad and manage their own exposure. Their compliance departments screen customers and payments against US, EU and UK lists and against export-control criteria, and they ask customers to explain the purpose of transactions, the end user and the origin of goods. For a Kazakhstan company this is where foreign sanctions become real.

Secondary sanctions risk, in general terms, is the risk that a foreign authority designates a non-US or non-EU company for dealings with already-designated persons or for facilitating prohibited transactions. Whether a specific transaction creates that risk is a question of the relevant foreign law and facts, and this article does not give conclusions on any foreign law. What it gives is a process that lets a company see the risk before the bank does.

What to screen

Counterparties and their owners

A screening hit rarely sits on the contract party itself. It sits on a shareholder, a parent, a director or a beneficial owner. The screening file for each counterparty therefore covers:

• the legal entity and its registration details;
• shareholders and participants, and their shareholders, until you reach individuals or listed companies;
• directors and authorized signatories;
• the bank and the bank's country;
• for goods: the producer, the end user and the destination country.

For Kazakhstan counterparties the ownership chain is verifiable through registration extracts and the register of beneficial owners under Article 6-1 of the AML/CFT Law. For foreign counterparties, ask for an ownership chart signed by a director and verify it against public registries where they exist.

Goods, services and routes

Some risk is attached to the object rather than the person: dual-use goods, industrial equipment, software, transport and financial services, re-export through third countries. A screening process that only checks names will miss it. The minimum is a short questionnaire on the product, its customs code, the end use and the delivery route, reviewed by someone who understands the group's own export-control policy.

The screening process step by step

Step 1. Onboarding questionnaire

Before the first contract, the counterparty completes a questionnaire covering ownership, management, bank details, countries of operation and, where relevant, end use. The questionnaire includes a representation that no owner, director or controlling person is designated under listed regimes, and an undertaking to notify changes.

Step 2. List screening

The names collected are checked against the lists the company has chosen to apply. The choice is a policy decision: at minimum the two Kazakhstan AFM lists; in practice also the US, EU and UK consolidated lists, and any others required by the group or by the company's banks. Screening is done through a commercial database or through official list downloads; the point is not the tool but the record. For every check keep the date, the lists used, the names screened, the result and the reviewer.

Step 3. Resolving hits

Most hits are false positives: common names, transliteration variants, unrelated entities. Each hit is resolved by comparing identifiers (date of birth, registration number, address, passport) and the outcome is recorded. A confirmed hit or an unresolved one goes to escalation.

Step 4. Risk rating and decision

The output is a written conclusion in one of three forms: proceed, proceed with conditions, or decline. Conditions can include a bank confirmation letter, an end-user certificate, payment in a specific currency, or exclusion of a particular product. The conclusion is signed by the person authorized under the policy, and for higher-risk cases by management.

Step 5. Ongoing monitoring

Lists change weekly. Re-screen the counterparty file on a fixed schedule, at every contract renewal and before large payments. Re-screen when ownership changes, and ask counterparties to confirm annually that the questionnaire is still accurate.

Stage	Output	Who signs
Onboarding	Questionnaire and ownership chart	Counterparty's director
Screening	Screening record with lists, date, result	Compliance officer
Hit resolution	Match/no-match note with identifiers	Compliance officer
Decision	Proceed / proceed with conditions / decline	Authorized manager
Monitoring	Re-screening log	Compliance officer

Contract clauses that carry the weight

A well-drafted contract does not remove sanctions risk, but it allocates it and gives a lawful exit. The usual set:

• Representations and warranties. Each party confirms that it, its owners and its controlling persons are not designated under the regimes named in the contract, and that the goods and funds are not subject to restrictions that would make performance unlawful for the other party.
• Notification. A duty to inform the other party within a short period of any designation, investigation or change of ownership that could affect the representation.
• Suspension and termination. The right to suspend performance and, after a cure period, to terminate without liability if a representation becomes untrue or if a bank refuses to process payment on sanctions grounds.
• Payment mechanics. Currency, paying bank and the consequence of a blocked payment: who bears the cost of delay, and whether an alternative route is a right or an obligation.
• End-use and re-export. For goods, an undertaking on the declared end use and destination, and a prohibition on re-export to restricted destinations.
• Compliance cooperation. A duty to provide documents the other party's bank requests within a set number of days.

Under Kazakhstan law the parties are free to agree such clauses in a contract governed by Kazakhstan law, and they are common in bilingual Russian and English contracts. For contracts under English law within the AIFC, the same clauses are drafted in the form familiar to foreign counterparties.

Documentation: what the bank will ask for

When a Kazakhstan bank stops a payment, it typically asks, within a short deadline, for the contract, invoices, shipping documents, the counterparty's ownership structure, evidence of the goods' origin and end use, and an explanation of the economic purpose. A company with a screening file answers in a day. A company without one starts collecting documents from a counterparty who may be in another time zone and may not be motivated to help. Keep for each transaction:

• the counterparty's screening record and conclusion;
• the contract with compliance clauses;
• transport and customs documents showing origin and destination;
• correspondence on end use where relevant.

Retention should follow the company's general document retention policy and, for subjects of financial monitoring, the AML/CFT Law's record-keeping requirements.

Escalation and governance

A screening process works only if someone owns it. In a small company this is the director or the finance lead; in a larger one, a compliance officer who reports outside the sales line. The policy fixes:

• who may approve "proceed with conditions" and who may approve exceptions;
• when management or the group's compliance function must be informed;
• how a decline is communicated to the counterparty (in writing, without stating conclusions on foreign law that the company is not in a position to make);
• how bank inquiries are handled and who signs the response.

Training matters here more than in most areas: a sales manager who understands why the questionnaire exists will collect it; one who does not will skip it.

Common mistakes

• Screening the contract party only and not its owners.
• Screening once at onboarding and never again.
• Keeping no record, so that the check cannot be shown to a bank or a partner.
• Copying a foreign group's policy without naming which lists actually apply to the Kazakhstan entity.
• Making legal conclusions about foreign sanctions law in correspondence with counterparties instead of describing the company's own policy.
• Ignoring goods and routes because the names were clean.

Questions and answers

Is sanctions screening required by Kazakhstan law?
Screening against the AFM's terrorism-financing and proliferation lists is required for subjects of financial monitoring under the AML/CFT Law. Screening against foreign sanctions lists is not a Kazakhstan statutory duty, but it is required in practice by banks, by foreign partners and by the group's own policy.

Which lists should a Kazakhstan company check?
The two AFM lists at minimum. Beyond that, the choice follows the company's exposure: the currencies it uses, the banks it works with and the countries of its partners. Most companies with foreign trade apply the US, EU and UK consolidated lists.

Can we rely on the bank's screening?
No. The bank protects itself and may simply block the payment. By the time a bank raises a question, the goods may have shipped and the money may be stuck. Your own check earlier is cheaper.

What if a counterparty refuses to fill in the questionnaire?
Treat the refusal as a risk factor. Some counterparties will provide the information after an explanation of why the bank requires it; a persistent refusal is usually a reason to decline or to add conditions.

Do we need a screening report in English?
If the report will be shown to a foreign partner or a foreign bank, yes. We prepare counterparty reports in Russian and English so that one document serves both the Kazakhstan bank and the foreign group.

How SHANYRAQ Legal can help

Within our compliance services we run one-off counterparty checks and set up ongoing screening: registries, beneficial owners, sanctions lists and litigation history, with a written conclusion in Russian and English. We draft the sanctions and compliance clauses for your contracts through our corporate law practice, prepare responses to bank inquiries when a payment is held, and train staff. Questionnaire templates and document lists are collected in our document checklists.

Current as of 28.09.2026. This material is for general information; requirements and fees are set by the competent authorities and are confirmed on the date of engagement.