News
In April, an order of the Kyrgyz government came into force, according to which all cross-border transfers in rubles should be made through the Capital Bank of Central Asia OJSC. Just before the move, the bank became state-owned, with 100% of its shares transferred to the Ministry of Finance. Earlier this year, another state-owned Kyrgyz bank came under secondary U.S. sanctions for its ties to Russia's Promsvyazbank and pro-Kremlin Moldovan oligarch Ilan Shor.
According to Kyrgyz media, Capital Bank will process all transfers by individuals and legal entities to and from Russia, including money sent by migrant workers to their families and payment for imports. In addition, ruble exchange transactions in excess of 3 million rubles ($36,500) per month per client will have to go through the same bank.
The National Bank's resolution describes the initiative as a pilot project that will last until Sept. 17. Last year, Russia accounted for 93% of all foreign remittances to Kyrgyzstan ($2.8 billion) and 83% of all funds withdrawn from Kyrgyzstan ($370 million).
A former Kyrgyz presidential administration official who wished to remain anonymous told The Insider that the country's authorities seek to monopolize the remittance market even if it means driving up fees and delaying processing.
“In Kyrgyzstan, all banks work with rubles in one way or another. All have the QIWI system installed to transfer money between Russia and Kyrgyzstan. By channeling all ruble transactions through one bank, the authorities pursue two goals, in my opinion. First, monopolizing the market will up their earnings, as transfer fees that used to go to different banks will now remain in one. Second, they want to establish control: to see who is making what transfers.
A lack of competition will make translations more expensive. Furthermore, given the large volume of ruble transfers, processing all of them in one bank will likely cause delays.
As for the impact of this decision on the investment climate, I doubt it will make much of a difference. Large Western and international corporations pay attention to the country's investment rating and political situation. But small and medium-sized businesses — which account for most of the investment in Kyrgyzstan — focus more on the profit.”
Assisting Russia in circumventing sanctions and doing business with a pro-Kremlin Moldovan oligarch
This past January, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) imposed restrictions on Kyrgyzstan's Keremet Bank, accusing it of collaborating with Russian officials and the sanctioned Promsvyazbank to implement a sanctions evasion scheme. According to OFAC, the Kyrgyz bank helped conduct cross-border transfers to Promsvyazbank, a state-owned bank that is used to finance the Russian defense industry and service large defense contracts.
The U.S. regulator reported that Ilan Shor, an Israeli-born pro-Russian Moldovan oligarch in exile, was also involved in this scheme. In 2024, a firm associated with Shor bought a controlling stake in Keremet Bank from the Kyrgyz Ministry of Finance.
The Kyrgyz Stock Exchange disclosed the sale of the stake in Keremet on Dec. 25, 2024. The Kyrgyz Ministry of Finance was reported to have sold part of its shares to Luxembourg-based Altair Holding S.A. The deal reduced the ministry's stake from 97.45% to 22.45%.
The connection between Keremet and Capital Bank can be traced through the state’s participation and management. In April, Kantemir Chalbaev, former deputy chair of the board at Keremet, chaired Capital Bank.
Andrei Curăraru, a security expert at WatchDog, told Moldovan news agency IPN that Сapital Bank is “following the same path” as Keremet. According to the expert, Сapital Bank may also face U.S. sanctions over its involvement in anti-Russian sanctions evasion schemes and ties with Ilan Shor.
On Apr. 17, the Kyrgyz Presidential Administration issued a statement in which it cast doubt on the veracity of “information from foreign and anonymous sources about the involvement of JSC ‘Capital Bank of Central Asia’ in circumventing sanctions and interaction with sanctioned individuals.” According to the statement, the bank's purpose is to “ensure transparency of financial flows and minimize sanctions risks” through state control over cross-border ruble transactions.
“Allegations of links with Ilan Shor and sanctioned entities are false, unfounded, and aimed at discrediting the financial system of Kyrgyzstan,” the presidential administration emphasized.
Shor has long had business interests in Kyrgyzstan. In 2014, a company he owned opened duty-free stores at airports in Bishkek and Osh. As Kloop wrote, Shor's business partners in this venture were former Moldovan customs chief Viorel Melnik and the daughter of Kyrgyz MP Kubanychbek Tumanov. The Moldovan oligarch was also reported to maintain close ties with the then Kyrgyz President Almazbek Atambayev.
Shor's involvement in helping Russia circumvent international sanctions was detailed last year by the RISE Moldova project, which revealed Shor’s creation of a network of four firms that help Russian businesses operate in international markets. These firms offer services that facilitate Russian companies’ efforts to reach settlements, take out loans, and obtain access to payment systems. The key entity in this scheme was A7 LLC, a company co-owned by Shor himself (51%) and Russia's Promsvyazbank.
On Apr. 18, Moldovan police reported searches in Gagauzia in a case of vote-buying, illegal party financing, and money laundering. According to the investigation, the money intended for bribery in the interests of the banned Shor party was transferred to pensioners and state employees through the Promsvyazbank mobile app.
Shor is under personal U.S. and EU sanctions and has also been placed on an international wanted list. Moldova has accused him of embezzling one billion dollars from the country's banking system. In addition, Moldovan authorities accuse the oligarch of interfering in the country’s elections. Last May, Shor announced he had received a Russian passport.
Capital Bank
Сapital Bank, formerly Akylinvestbank, was founded in 1994. As of 2008 it belonged to Russian businessman Georgy Chesnokov, and in 2012 the bank was purchased by the family of Kyrgyz MP Chynybay Tursunbekov (who died in 2020). In 2024, the bank, in which Tursunbekov's son and two daughters owned stakes, came under state control. The late MP's daughters, Aidai Tursunbekova and Begimai Tursunbekova, were arrested last July on money laundering charges.