More than 20 MPs and peers have called on the foreign secretary to take action against institutions and individuals in Kyrgyzstan allegedly facilitating large-scale Russian sanctions evasion. They urged the UK to levy personal sanctions against three top Kyrgyz officials for their alleged role in facilitating Russian sanctions evasion more broadly, and more specifically for allowing Kyrgyzstan to host infrastructure supporting the cryptocurrency A7A5.
What is A7A5?
A7A5 is a stablecoin pegged to the ruble that has facilitated more than $100bn in transactions. It is linked to the sanctioned Russian bank Promsvyazbank. The UK, EU and US have imposed sanctions on A7A5, making it unavailable for purchase in the UK, US and most of Europe. However, exchanges in Kyrgyzstan, including Grinex and Meer (now under sanctions), have allowed the purchase of A7A5 with cash.
Alexander Browder, a cryptocurrency expert and author of a recent report on Russia's use of stablecoins to evade sanctions, said: “It’s time to tighten the noose on Russia’s sanctions evasion. Kyrgyzstan shouldn’t be allowed to enable Russia to evade the UK sanctions by harbouring Russian stablecoin operations, which ultimately lead to thousands of Ukrainian deaths.”
Targeted Officials
In a letter, the MPs and peers called on the UK to impose personal sanctions against the head of Kyrgyzstan’s central bank, Melis Turgunbaev; Kyrgyzstan’s general prosecutor, Maksat Asanaliev; and the head of the country’s financial regulations authority, Marat Pirnazarov.
Chris Coghlan, the Liberal Democrat MP for Dorking and Horley and a signatory of the letter, said: “The British government needs to shut down these loopholes now. This is one mechanism that Russia is using to finance its brutal war of aggression in Ukraine, and the UK government should take all measures it can to restrict the flow of funds to Putin.”
The former Conservative party leader Iain Duncan Smith added: “Targeted sanctions must be used to ensure that those who are enabling Russia’s illegal war machine are held accountable.”
How A7A5 Evades Sanctions
A7A5 can be traded with other cryptocurrencies, eventually allowing its holders to access dollars and the broader financial system. This has enabled A7A5 to continue functioning and expanding as “the main platform for sanctioned Russian individuals and entities to evade sanctions,” the letter said, moving more than $1bn a day. The company behind A7A5 appears to be trying to expand into Africa, reportedly recruiting staff across the continent.
Browder noted that A7A5 was “specifically designed for aiding sanctions evasion technology. What makes it a really good stablecoin for sanctions evasion is that it is completely controlled by Russian-backed entities and individuals. Any criminal who uses it has no fear that they will face prosecution or have their assets seized.”
Previous Sanctions Not Enough
Last year, the UK imposed sanctions on several entities in Kyrgyzstan, including Grinex and Meer, for providing infrastructure for A7A5. The letter implied that this was insufficient and that senior officials must be sanctioned. “One of the main reasons that A7A5 continues to operate is because of the cooperation from financial institutions and authorities in Kyrgyzstan, which registered A7A5 in the first place,” it said.
Turgunbaev, Asanaliev, Pirnazarov, A7A5 and the Foreign, Commonwealth and Development Office were approached for comment.
