FATF Status

Kazakhstan is not currently identified by FATF as having substantial money laundering and terrorist financing (ML/TF) risks or having strategic AML/CFT deficiencies

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Kazakhstan was undertaken in 2023. According to that Evaluation, Kazakhstan was deemed Compliant for 5 and Largely Compliant for 28 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective 7 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.

US Department of State Money Laundering assessment (INCSR)

Kazakhstan is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes.

Overview

Tax evasion, the shadow economy, corruption, Ponzi schemes, cybercrime, and drug trafficking are the main sources of illicit proceeds criminals seek to launder.    

In 2021, Kazakhstan updated its national risk assessment (NRA) and adopted new regulations to its anti-money laundering/combating the financing of terrorism (AML/CFT) law.  Through public pronouncements and amendments to the law, Kazakhstan is taking steps to comply with international AML/CFT norms.   

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           39

World Governance Indicator – Control of Corruption             49

Companies report corruption as the number one constraint for doing business in Kazakhstan. Corruption is rampant throughout the country's political circles, and networks of patronage and clientelism negatively affect the country’s business environment. Furthermore, challenging bureaucracy and vague legislation restricts foreign investment. Navigating the public administration is also challenging for businesses, as petty corruption is endemic. Facilitation payments and bribery are illegal in the public and the private sector according to the country's Criminal Code, but the state bodies that are responsible for combating corruption are ineffective, unreliable, and fail to hold high-level officials responsible for corruption, abuses of office, and conflicts of interest. A weak judicial system further compromises Kazakhstan’s otherwise extensive legal framework for dealing with corruption. For further information - GAN Integrity Business Anti-Corruption Portal

Kazakhstan has made significant progress towards creating a market economy since gaining its independence from the Soviet Union in 1991. It has attracted significant foreign investment to develop its abundant mineral, petroleum, and natural gas resources. As of January 2023, the stock of foreign direct investment (FDI) totaled $169.2 billion, including $43.83 billion from the U.S., according to official central bank statistics. Publicly available information indicates that U.S. investments in the hydrocarbons sector alone far exceed this official statistic.

While Kazakhstan’s vast hydrocarbon and mineral reserves remain the backbone of the economy, the government continues to make incremental progress toward diversification into other sectors.  The Government of Kazakhstan (GOK) maintains an active dialogue with foreign investors through formal channels such as the President’s Foreign Investors Council and through bilateral channels.  Kazakhstan is a member of the World Trade Organization (WTO) and the Eurasian Economic Union (EAEU).

Given Kazakhstan’s long border and extensive economic ties with Russia, Russian aggression against Ukraine and ensuing sanctions against Russia affect Kazakhstan’s investment climate. Some investors may be deterred from investing in Kazakhstan, while others may find Kazakhstan an attractive alternative to doing business in Russia or Belarus. The GOK continues expressing a commitment to complying with Western sanctions against Russia and facilitating relocation of Western investors from Russia to Kazakhstan.
For more than one year since the January 2022 unrest and Russia’s invasion of Ukraine, Kazakhstan’s economy has proven resilient, mostly due to favorable prices for its commodity exports. In the meanwhile, the war and sanctions not only caused supply chain distortion and fueled double-digit inflation, but also opened new trade and investment opportunities for the country. The government announced an electronic system for tracking of trucking exports to EAEU countries, which was implemented in April 2023, and enacted a new law on export control of dual-use goods in March 2023, both of which could address risks of sanction and export control evasion.

After civil unrest in January 2022 President Tokayev assured foreign investors that the GOK would ensure a stable investment climate and meet its commitments to investors. President Tokayev announced political and economic reforms in March 2022 aimed at bringing positive changes to the country’s investment climate by increasing privatization, combatting corruption, and reducing the outsized role of monopolies and oligopolies in the economy. President Tokayev reiterated his commitment to reform after being reelected in November 2022.

Despite institutional and legal reforms, corruption, excessive bureaucracy, arbitrary law enforcement, and limited access to a skilled workforce in certain regions and sectors continue to present challenges.  The government’s tendency to increase its regulatory role in relations with investors, to favor an import-substitution policy, to limit the use of foreign labor, and to intervene in companies’ operations continues to concern foreign investors.  Foreign firms cite the need for better rule of law, deeper investment in human capital, improved transport and logistics infrastructure, a more open and flexible trade policy, a more favorable work-permit regime, and a more customer-friendly and consistent tax administration.

Country Links

Committee on Financial Monitoring of the Ministry of Finance of the Republic of Kazakhstan (Finmonitoring)

National Bank of Kazakhstan