Turkmenistan

The Republic of Turkmenistan is an entirely landlocked country in the southern-central part of Central Asia. In terms of economy, this country is known for being dependent on hydrocarbons, with natural gas and oil accounting for a substantial amount of its export earnings and state revenues. Overbearing government control of the private sector, agricultural production, and monetary policy prevails in the country. Turkmenistan is a country that can be best described as an authoritarian political system with highly centralized dynastic rule. Control of power lies primarily with President Serdar Berdimuhamedov along with his father, Gurbanguly Berdimuhamedov, who acts as the head of the country’s council.

For corporate compliance purposes, engaging with or operating in Turkmenistan is an extremely risky venture because of the systemic nature of the problem. Public corruption is a deep-rooted problem in all institutions, ranging from the management of land, through enforcement of customs duties, to major decrees on public infrastructure development. The country is known to perform poorly on international transparency indicators, scoring a poor 17 out of 100 on the 2025 Corruption Perceptions Index by Transparency International, placing it at position 167 out of 182 territories evaluated. While AML procedures and CTF regulations are in place, there is a problem of lack of enforcement and general nepotism in public administration. From the regulatory point of view, the Eurasian Group on Combating Money Laundering (EAG) improved Turkmenistan's ratings on some technical parameters in mid-2026. Nonetheless, Turkmenistan still qualifies for the "enhanced follow-up" procedure because of systemic problems of practical implementation.

To date, no universal or international autonomous sanctions against Turkmenistan have been imposed on the sovereign state by any international body such as the UN or the US Office of Foreign Assets Control (OFAC). However, the country officially enforces the UN sanctions but has no list of autonomous sanctions. In the absence of an overall embargo, high levels of financial compliance remain a problem. Severe controls and distortions in the exchange rate constitute major obstacles to capital flight. Business dealings are also isolated from the outside world by the country’s poor development of its banking sector, the presence of a directed credit system, and a complete lack of multilateral development programs. As a result, FDI has become largely concentrated within state-sanctioned corridors with heavy emphasis on the maintenance of the energy infrastructure and pipelines from the neighboring region, primarily China.