Kazakhstan has become one of the most scrutinised jurisdictions in global trade compliance. Its position as a transit hub between Russia, China, the European Union and Central Asia means that goods, payments and corporate structures passing through the country attract close attention from regulators in Washington, Brussels and London. For any international business with Kazakhstani operations, counterparties or supply chains, understanding the local legal framework - and how it intersects with extraterritorial sanctions regimes - is no longer optional. This article maps the legal landscape, identifies the highest-risk scenarios, and sets out practical tools for structuring compliant trade operations in Kazakhstan.
Kazakhstan's primary instrument governing foreign trade is the Law on Regulation of Trade Activity (Закон о регулировании торговой деятельности), which establishes the general principles of import and export operations. However, the more operationally significant framework is the Eurasian Economic Union (EAEU) Customs Code (Таможенный кодекс ЕАЭС), which applies directly in Kazakhstan as a member state of the EAEU. The EAEU Customs Code governs tariff classification, customs valuation, origin of goods, and the procedural rules for declarations filed with the State Revenue Committee (Комитет государственных доходов).
Kazakhstan does not maintain its own autonomous sanctions list comparable to those of the United States Office of Foreign Assets Control (OFAC) or the EU's Consolidated List. Domestic legislation does not impose secondary sanctions. Nevertheless, Kazakhstani legal entities and individuals remain exposed to foreign sanctions through several mechanisms: correspondent banking relationships, contractual governing law clauses, and the nationality of ultimate beneficial owners. A Kazakhstani company whose transaction is denominated in US dollars and cleared through a US correspondent bank is subject to OFAC jurisdiction regardless of where the company is incorporated.
The Law on Export Control (Закон об экспортном контроле) establishes a licensing regime for dual-use goods, military equipment and technologies with potential weapons applications. Article 6 of that law requires exporters to obtain a licence from the Ministry of Industry and Infrastructure Development (Министерство индустрии и инфраструктурного развития) before shipping controlled items. The control lists are periodically updated to align with international non-proliferation regimes, including the Wassenaar Arrangement and the Nuclear Suppliers Group, to which Kazakhstan is a signatory.
The practical consequence of this dual-layer structure - EAEU customs rules on one side and extraterritorial foreign sanctions on the other - is that a transaction can be fully compliant with Kazakhstani domestic law and simultaneously trigger sanctions exposure under US or EU law. Many international clients underappreciate this gap when structuring their first operations in the country.
The United States exercises jurisdiction over transactions that involve US persons, US-origin goods or technology, US dollar clearing, or entities on the Specially Designated Nationals (SDN) list. The EU's sanctions regulations apply to EU persons and to transactions conducted within EU territory, but also extend to subsidiaries of EU companies operating abroad in certain circumstances. The United Kingdom's sanctions framework, administered by the Office of Financial Sanctions Implementation (OFSI), follows a broadly similar logic.
Kazakhstan's geographic position creates specific exposure vectors. The country shares long borders with Russia and China, and the Trans-Caspian International Transport Route (Middle Corridor) has grown significantly as a logistics alternative. Western regulators have publicly identified Kazakhstan as a jurisdiction of concern for potential sanctions circumvention - the re-export of controlled goods to sanctioned destinations through intermediary entities. This has led to enhanced due diligence requirements imposed by European and American banks on transactions involving Kazakhstani counterparties, even where those counterparties have no direct connection to sanctioned parties.
A non-obvious risk for foreign investors is the concept of 'facilitation.' Under US law, a non-US company that knowingly facilitates a transaction that a US person would be prohibited from conducting can itself become subject to secondary sanctions or enforcement action. This means a Kazakhstani trading company acting as an intermediary for goods ultimately destined for a sanctioned end-user faces potential designation even if it has no US nexus in the transaction itself.
In practice, it is important to consider that Kazakhstani banks have responded to this environment by implementing their own internal compliance filters that often exceed the requirements of domestic law. Several major Kazakhstani financial institutions have declined transactions involving certain commodity categories or counterparty geographies, citing reputational risk and correspondent banking relationships. This de facto compliance layer operates independently of any legal obligation under Kazakhstani law and can block commercially legitimate transactions without formal legal recourse.
To receive a checklist on sanctions exposure assessment for operations in Kazakhstan, send a request to info@vlo.com.
The Kazakhstani export control regime covers three main categories: military goods and technologies, dual-use items, and goods subject to international non-proliferation commitments. The Ministry of Industry and Infrastructure Development administers the licensing process, and the relevant control lists are set out in Government Resolution No. 1048 and subsequent amendments. Exporters must conduct a classification analysis before each shipment of potentially controlled items.
The licensing process involves several steps. The exporter submits an application to the Ministry together with technical documentation, end-user certificates, and information about the foreign recipient. Processing times vary but typically run between 20 and 45 working days for standard applications. Expedited review is available in limited circumstances. Licences are transaction-specific and cannot be reused across multiple shipments without amendment.
A common mistake made by international companies is treating the Kazakhstani export control licence as a complete compliance solution. Obtaining a domestic licence does not insulate the exporter from foreign export control requirements. US Export Administration Regulations (EAR), administered by the Bureau of Industry and Security (BIS), apply to US-origin items regardless of where the re-export originates. If a Kazakhstani company re-exports US-origin technology to a restricted destination, BIS retains jurisdiction even though the transaction is licensed under Kazakhstani law.
The practical scenarios here differ significantly by transaction type:
The cost of building a functional export control compliance programme for a mid-sized trading operation in Kazakhstan typically starts from the low thousands of USD for initial legal structuring, with ongoing advisory costs depending on transaction volume and complexity.
Kazakhstan has a domestic anti-corruption framework anchored in the Law on Combating Corruption (Закон о противодействии коррупции) and the Criminal Code (Уголовный кодекс). Article 366 of the Criminal Code criminalises bribery of public officials, and Article 252 addresses commercial bribery. The Agency for Financial Monitoring (Агентство по финансовому мониторингу) is the primary body responsible for investigating corruption offences and financial crimes.
For international companies, the more operationally significant instruments are the US Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act 2010. The FCPA applies to any issuer of US securities, any US person, and any company that takes any act in furtherance of a corrupt payment within US territory - including sending an email through a US server. The UK Bribery Act applies to any company that carries on business in the United Kingdom, regardless of where the corrupt act occurs. Both statutes cover payments to foreign government officials, and Kazakhstan's state-owned enterprise sector is extensive, meaning that many routine commercial counterparties qualify as 'foreign officials' under these laws.
In practice, it is important to consider that Kazakhstan's economy retains a significant state-owned enterprise component across energy, mining, transport and financial services. Transactions involving KazMunayGas, Samruk-Kazyna portfolio companies, or government procurement processes require heightened anti-corruption due diligence. Facilitation payments - small payments to expedite routine government actions - are prohibited under the UK Bribery Act and carry significant FCPA risk, even though they may be treated differently under local practice.
A common mistake is assuming that using a local agent or distributor insulates the foreign principal from liability. Both the FCPA and the UK Bribery Act impose liability for payments made through third parties where the principal knew or should have known that the agent would use the funds corruptly. Adequate due diligence on local intermediaries - including background checks, contractual anti-corruption representations, and audit rights - is a legal necessity, not merely a best practice.
To receive a checklist on anti-corruption due diligence for business partners in Kazakhstan, send a request to info@vlo.com.
Kazakhstan's customs administration operates within the EAEU framework, with the State Revenue Committee as the competent authority for customs declarations, post-clearance audits and enforcement. The EAEU Customs Code establishes uniform rules for tariff classification using the Harmonised System (HS), customs valuation based on the transaction value method, and rules of origin that determine preferential treatment under EAEU free trade agreements.
Post-clearance audits are a significant compliance risk that many importers underestimate. The State Revenue Committee has the authority to audit customs declarations for up to three years after the date of release of goods. Audits can result in additional customs duties, VAT assessments, and penalties. Where the customs authority determines that goods were deliberately misclassified or undervalued, criminal liability under Article 214 of the Criminal Code (customs evasion) may follow.
Transfer pricing in customs valuation is a recurring area of dispute. Related-party transactions - where the buyer and seller are affiliated companies - attract scrutiny because the transaction value may not reflect arm's-length pricing. The customs authority can reject the declared transaction value and substitute an alternative valuation method. Defending the declared value requires contemporaneous documentation: intercompany pricing policies, benchmarking studies, and evidence that the relationship did not influence the price.
Three practical scenarios illustrate the range of customs compliance challenges:
The cost of resolving a customs dispute through administrative appeal or litigation before the specialised inter-district economic courts (специализированные межрайонные экономические суды) varies with the amount in dispute. Legal fees for customs disputes typically start from the low thousands of USD, with state duties calculated as a percentage of the claim value.
Kazakhstan offers several dispute resolution mechanisms for international trade disputes. Domestic courts - specifically the specialised inter-district economic courts and the Supreme Court (Верховный суд) - have jurisdiction over commercial disputes involving Kazakhstani parties. The Astana International Financial Centre (AIFC) Court and the AIFC International Arbitration Centre (IAC) provide an English-language, common-law-based alternative for disputes involving AIFC participants or where parties have agreed to AIFC jurisdiction.
International arbitration remains the preferred mechanism for cross-border commercial disputes. Kazakhstan is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Нью-Йоркская конвенция), meaning that awards rendered in other contracting states are enforceable in Kazakhstan through the domestic courts. The enforcement process requires filing a petition with the competent court, and the grounds for refusal are limited to those set out in the Convention. In practice, enforcement proceedings take between three and six months from filing to execution, depending on the complexity of the case and whether the debtor contests the application.
Pre-trial dispute resolution is not generally mandatory in commercial disputes under Kazakhstani law, but many commercial contracts include mandatory negotiation or mediation clauses. The Law on Mediation (Закон о медиации) provides a framework for voluntary mediation, and mediated settlement agreements can be enforced as court judgments if registered with the court. For disputes involving government contracts or regulatory decisions, administrative appeal procedures must typically be exhausted before judicial review is available.
A non-obvious risk in enforcement proceedings is the treatment of assets held through Kazakhstani state-owned entities or sovereign wealth fund structures. Enforcement against assets of the National Fund of Kazakhstan or Samruk-Kazyna portfolio companies may engage sovereign immunity arguments, and the procedural steps for overcoming those arguments require careful advance planning.
We can help build a strategy for resolving international trade disputes in Kazakhstan. Contact info@vlo.com to discuss the specifics of your situation.
What is the most significant practical risk for a foreign company trading through Kazakhstan?
The most significant risk is inadvertent sanctions exposure through the supply chain or payment chain. A transaction that is fully compliant with Kazakhstani domestic law can still trigger OFAC, EU or OFSI enforcement if it involves US dollar clearing, US-origin goods, or a counterparty with a connection to a sanctioned party. Foreign companies often discover this exposure only after a bank declines a payment or a correspondent banking relationship is suspended. Conducting a sanctions risk assessment before entering the Kazakhstani market - covering counterparties, payment flows, and goods categories - is the most effective preventive measure.
How long does it take to resolve a customs dispute in Kazakhstan, and what does it cost?
Administrative appeals against customs decisions must be filed within 30 days of the disputed decision and are reviewed within 30 working days by the State Revenue Committee. If the administrative appeal is unsuccessful, judicial review before the specialised inter-district economic court typically takes between three and six months at first instance. Appeals to the appellate court add a further two to four months. Legal fees for customs disputes start from the low thousands of USD for straightforward classification disputes and increase with the amount in dispute and procedural complexity. State duties are calculated as a percentage of the claim value and are generally modest relative to the amounts at stake in commercial disputes.
When should a company use AIFC arbitration rather than domestic Kazakhstani courts?
AIFC arbitration is most appropriate where the contract involves a foreign party, the transaction value is substantial, the parties want English-language proceedings under common law principles, and enforceability of the award in multiple jurisdictions is a priority. Domestic Kazakhstani courts are more practical for disputes involving purely local parties, smaller amounts, or matters where the counterparty's assets are located in Kazakhstan and rapid interim relief is needed. The AIFC Court also has jurisdiction over disputes where at least one party is an AIFC participant, and its judgments are enforceable in Kazakhstan without a separate exequatur procedure. For disputes with a significant cross-border element, the enforceability advantage of an AIFC or international arbitration award generally outweighs the higher procedural costs.
International trade and sanctions compliance in Kazakhstan requires managing two parallel legal systems simultaneously: the domestic EAEU-based framework and the extraterritorial reach of US, EU and UK regulations. The gap between these systems is where most enforcement risk concentrates. Companies that treat Kazakhstani domestic compliance as sufficient, without mapping their exposure under foreign law, face material legal and financial consequences. A structured compliance programme - covering sanctions screening, export control classification, anti-corruption due diligence and customs documentation - is the foundation of sustainable operations in this market.
To receive a checklist on building a trade compliance programme for Kazakhstan, send a request to info@vlo.com.
Our law firm Vetrov & Partners has experience supporting clients in Kazakhstan on international trade, sanctions compliance, export controls, anti-corruption and customs matters. We can assist with sanctions risk assessments, export control licensing, anti-corruption due diligence on local partners, customs dispute resolution, and structuring dispute resolution clauses for cross-border contracts. To receive a consultation, contact: info@vlo.com.