As the U.S. presidential elections approach, sanctions pressure on Russia continues to grow. This trend also affects the alternative financial-economic system created after February 2022. News about payment service issues for Russian individuals and legal entities in countries that remain friendly to Russia has become regular. In particular, the Central Asian corridor, which had long allowed many Russian citizens and companies to solve their problems after the country was disconnected from SWIFT, is gradually closing. For example, on August 23, 2024, the U.S. Department of the Treasury imposed new sanctions against Russian companies involved in software development, communication technologies, information security, and electronics manufacturing. The Center of Financial Technologies (CFT), the parent company and software vendor of the payment system Golden Crown, which remains highly popular in Central Asian countries that continue to cooperate with Russia, was also included in the list. At the time, experts suggested that financial traffic would not be halted but would simply change its routing. Judging by feedback from the ground, this is exactly what happened.
An interview with one of the leading experts of the republic, adviser to the Minister of Economy, Nurgul Akimova, was published in the Kyrgyz edition of Economist. She paid special attention to the risks arising from the cooperation of Kyrgyz financial institutions with the CFT (Center of Financial Technologies), which is under U.S. sanctions, and its subsidiary companies.
"Sanctions against CFT were introduced as part of a broader set of measures aimed at blocking Russian payment systems used to bypass international restrictions," Nurgul Akimova noted. According to the expert, thanks to CFT and its subsidiary Golden Crown, Russian banks and citizens were able to continue international transactions after Russia was cut off from SWIFT.
It should be noted that the official volume of financial flows between Russia and Kyrgyzstan amounted to $2.5 billion in 2023—almost a quarter of the GDP of the Central Asian republic. A significant portion of these flows consists of remittances from migrant workers, who actively used Golden Crown for this purpose. The service has been unavailable since August, as have direct money transfers to Kyrgyzstan from Sberbank, T-Bank, MTS Bank, and other sanctioned financial institutions. However, this does not mean isolation.
“A significant number of financial institutions in Kyrgyzstan are currently using the services of the Russian processing center Kartstandard, which is part of the CFT group and its affiliated local company «СиЭсАй» (CSI) to carry out processing operations,”
Nurgul Akimova stated in the same interview.
The company CSI was established at the end of 2023, and its owner is Narynbek Alybaev, a highly important figure in the financial system of Kyrgyzstan (and recently, Russia as well).
Before this, Narynbek Alybaev held top management positions in several major Kyrgyz banks. Until 2010, he headed the marketing department at the Settlement-Savings Company, now known as RSC Bank. From 2010 to 2016, he was the Deputy Chairman of the Board at OJSC Commercial Bank Kyrgyzstan, now branded as MBank. In February 2018, he was appointed Deputy Chairman of the Board at Rosinbank, now known as Keremet Bank.
Now, all these financial institutions—RSC, MBank, and Keremet—are at risk of falling under sanctions due to their cooperation with CFT's subsidiaries CSAI and Kartstandard. However, this risk does not stop them from taking further steps.
For example, in September, after new sanctions were introduced, MBank became a partner of the Singaporean fintech company Thunes, which specializes in cross-border B2B payments. Among the counterparties is Russia's Bank 131, which serves as a bridge to the entire Russian financial system.
Thus, new routes for financial flows will be found. However, now, the sanctions risk is borne not only by Russia but also by Kyrgyzstan.
Oleg Sharapov