Kazakh billionaire Turlov seeks to lift sanctions on business in Ukraine

Timur Turlov, a Kazakh billionaire and former Russian citizen, is actively seeking ways to lift sanctions on its subsidiary in Ukraine — Freedom Finance Ukraine LLC. The company was added to the list of sanctioned entities back in October 2022, when the National Security and Defence Council of Ukraine (NSDC) imposed restrictive measures in response to an investigation by the Security Service of Ukraine (SBU).

Basis for sanctions and accusations

Sanctions against Freedom Finance Ukraine were introduced based on data from the SBU investigation, according to which Turlov’s structures may have been involved in transferring funds from Russia to Ukraine, which, it is alleged, could have been used to finance separatist formations in the Donbas. In addition, the company was suspected of providing illegal financial services to Russian organisations through Ukrainian government bonds.

Freedom Finance Ukraine categorically denies all accusations. Despite this, the sanctions have had a certain impact on the company’s reputation and attracted attention to its activities from US regulators. In particular, since autumn 2023, Freedom Finance has been the subject of an investigation by the US Department of Justice and the Securities and Exchange Commission, which could lead to negative consequences for the business, despite the fact that the direct impact of Ukrainian sanctions on the company’s operations is not significant.

Reputational risks and increased external pressure

Ukrainian sanctions, while not causing serious damage to Turlov’s business, significantly worsen its reputational standing. These measures attract additional attention from US regulators, which could become a significant long-term risk for the company. In this regard, to minimise damage and eliminate the consequences of the sanctions, Turlov decided to engage Natalia Malyarchuk — a Kazakh expert in GR (government relations), who previously chaired the Board of Trustees of Transparency International in Kazakhstan.

Natalia Malyarchuk’s role in resolving issues

Natalia Malyarchuk, an ethnic Ukrainian, has long maintained strong ties with influential Ukrainian NGOs and has friendly relations with Ukrainian diplomats, including Yuri Lazebnyk, the Ukrainian ambassador to Kazakhstan during President Poroshenko’s tenure. In the context of a reduced level of diplomatic relations between Kazakhstan and Ukraine, where Ukraine does not have a full ambassador and its representation is limited to a chargé d’affaires, Malyarchuk has effectively become an alternative channel for resolving bilateral issues.

Review of sanctions decisions and political manoeuvres

Turlov hopes for two key aspects that could influence the situation. First, the change in leadership of the Ukrainian NSDC following the possible resignation of Oleksiy Danilov in March 2024, which may provide an opportunity to review decisions made by the previous composition. 

Second, Turlov is trying to demonstrate his loyalty to Western sanctions against Russia. It recently became known that Kazakhstan’s Freedom Bank, owned by Turlov, decided to cease transactions with the Russian payment system Zolotaya Korona in response to US sanctions imposed on a number of Russian financial organisations.