Methodological Guidelines on Risk Management for Transactions Involving Dual-Use and High-Priority Goods

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Date of creation: 2026-03-30

Appendix to the Resolution of the Committee for Supervision of the National Bank of the Kyrgyz Republic of March 26, 2026 No. 12/2

METHODOLOGICAL GUIDELINES on risk management in the conduct of transactions involving dual-use and high-priority goods

1. General Provisions

2. These Methodological Guidelines on risk management in the conduct of transactions involving dual-use and high-priority goods (hereinafter – the Methodological Guidelines) are developed to ensure effective management of compliance risks in the identification, assessment, and management of risks associated with transactions involving dual-use and high-priority goods.

3. The Methodological Guidelines aim to raise awareness among commercial banks about the risks arising from transactions involving dual-use and high-priority goods.

4. These Methodological Guidelines may be used by commercial banks (hereinafter – banks) when forming the bank's internal policy to reduce risks.

5. For the purposes of these Methodological Guidelines, the following terms are used:

• HS code

– a special classification code for goods used in foreign economic activity.

• Compliance risk

– the probability of losses arising from the bank and its employees' failure to comply with the legislation of the Kyrgyz Republic, regulatory legal acts of the National Bank of the Kyrgyz Republic, internal documents of the bank, including the organization of internal control to counter the financing of criminal activities and the legalization (money laundering) of criminal proceeds, regulating the procedure for the bank to provide services and conduct transactions in the financial market, as well as the legislation of foreign states affecting the bank's activities.

• Reputational risk

– the risk of losses to which the bank is exposed as a result of negative public opinion about the bank or its subsidiaries. It affects the bank's ability to establish new relationships or maintain existing relationships.

• Sanctions risk

– the risk of legal, financial, operational, and reputational consequences arising from intentional or unintentional participation in activities prohibited, restricted, or conditioned by one or more sanctions regimes (including the sanctions regimes of the European Union, the United States (OFAC), and the United Kingdom (OFSI)).

• Dual-use goods

– goods, technologies, and/or software that can be used for both civilian and military-industrial purposes.

• High-priority goods

– categories of goods, equipment, and components with an increased risk of use for military purposes or circumvention of international sanctions restrictions.

5. Sanctions risks may arise during the export, re-export, and transit of dual-use and high-priority goods or when persons included in sanctions lists participate in such transactions.

6. Transactions involving dual-use and high-priority goods may create various risks for banks, including reputational and compliance risks. Banks are advised to take these risks into account when carrying out clients' transactions related to the international trade of dual-use and high-priority goods.

7. Sources of Information on Dual-Use and High-Priority Goods

8. Banks are advised to use national and international sources of information, including:

• the national control list of controlled products of the Kyrgyz Republic and other official documents of competent authorities regulating the export, import, and circulation of controlled goods;

• lists of dual-use and high-priority goods, as well as sanctions lists of persons and goods of the European Union, the United States (OFAC), the United Kingdom, and other jurisdictions;

• other official international sources of information on goods and technologies of increased risk.

8. The use of these sources allows banks to identify high-risk transactions in the conduct of payments for the supply of goods and contributes to improving the effectiveness of risk management, as well as reducing the risks to which the bank is exposed as a result of transactions involving dual-use and high-priority goods.

9. Indicators of Increased Risk of Transactions

10. When conducting transactions related to the international trade of goods, banks are advised to take into account the following indicators of increased risk:

• mismatch between the characteristics of the goods and the client's business profile;
• mismatch between the goods and the stated HS code;
• lack of information about the end-user of the goods or provision of incomplete information about their intended use;
• participation of intermediaries or companies without an obvious economic purpose in the transaction;
• complex or economically unjustified supply routes for goods;
• use of transit jurisdictions or countries through which goods may be re-exported to circumvent sanctions or export restrictions;
• mismatch between the cost of the goods and their market value.

10. The presence of the indicators specified in paragraph 9 of the Methodological Guidelines may indicate the need for additional verification of the client's transaction.

11. The list of these indicators of increased risk is not exhaustive and is recommended for use by banks in conjunction with internal risk management procedures, as well as taking into account the specifics of clients, their counterparties, and transactions.

12. Risk Management Measures

13. For the effective management of these risks, banks are advised to apply a risk-based approach.

14. In the event of identifying transactions potentially involving dual-use and high-priority goods, banks are advised to apply enhanced control measures, including:

• conducting additional verification of the client and the transaction;
• obtaining additional information about the client's ownership structure and ultimate beneficial owners;
• requesting documents confirming the economic feasibility of the transaction (contracts, invoices, goods specifications, transport documents, etc.);
• obtaining information about the end-user of the goods (verification of counterparties and countries of destination for goods);
• conducting checks of transaction participants against sanctions lists and other available information sources;
• conducting enhanced monitoring of transactions with signs of increased risk;
• analyzing the supply route of the goods.

14. In cases where the client has not provided the requested documents and it is impossible to obtain sufficient information to assess risks, banks are advised to consider the possibility of suspending or refusing to conduct the transaction within the framework of internal procedures and risk management policies in accordance with legislative requirements.

15. Banks are advised to document the results of the analysis and decisions made within the internal control system.

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