NICOSIA – Revelations from leaked documents showed that 67 Russian billionaires are tucking their fortunes away on Cyprus – long known as a tax haven for the rich – to avoid international sanctions over the invasion of Ukraine.
That was shown in an investigation by the International Consortium of Investigative Journalists (ICIJ,) Paper Trail Media and 67 media partners who said the Greek-Cypriot side of the island – a member of the European Union – “plays an even bigger role than was commonly known in moving dirty money for Russian President Vladimir Putin’s autocratic regime and other brutal dictators and anti-democratic actors.”
The product of an 8-month investigation called Cyprus Confidential stories, the journalist and media groups said it explored “Russia’s long-standing hegemony over Cyprus’ deeply intertwined worlds of politics and finance.”
The island is home to about 18,000 Russian expatriates, has long been known for its banks being used by wealthy Russians to hide their money, and has a strong Russian business influence.
Cyprus reluctantly went along with EU sanctions over the invasion, including barring Russian airlines but the investigation indicated that the island is still being used by influential Russians to avoid penalties.
“Kremlin associates … channeled payments through Cyprus to a prominent German journalist known for producing fawning coverage of Russia’s autocratic leader,” the report also said.
The investigation said that the EU has been lenient with cyprus nor stopped “a banking system bloated by illicit money,” and said that during the invasion that accounting firm PwC’s Cypriot unit” helped Russian oligarchs shuffle their riches and undermine Western sanctions designed to cut off Putin’s war funding.”
In dramatic fashion it said that as Western nations’ used financial sanctions to block the flow of money that other governments use for hostile purposes, Cyprus became a cloak-and-dagger financial battleground.”
Cyprus has long been fighting a reputation for being a place where criminals hide cash and a previous government ended a residency scheme with valuable EU passports after it was found riddled with money laundering.
The investigation draws on 3.6 million leaked documents from six firms in Cyprus, dating mostly from the mid-1990s to April 2022, two months after the invasion which brought sanctions that exempted Russian energy supplies crucial to the EU.
THE RUSSIANS KEPT COMING
The Cypriot firms’ clients include 25 Russians later sanctioned by the West after Russia’s annexation of Crimea in 2014, according to ICIJ, although it’s unclear if all of those relationships continued, said Forbes.
The magazine said the Russians were on its World’s Billionaires list and used financial services firms on the island to hide their wealth and keep it out of reach from Western sanctions.
“We see the wartime shifting of hundreds of millions of dollars in assets, which we believe ultimately demolishes the notion that financial sanctions have halted Russian dark money flows,” said ICIJ Managing Editor Fergus Shiel about the findings.
Many of Russia’s richest people relied on Cyprus firms to manage their vast wealth, the investigators said the documents showed, including Roman Abramovich – former owner of the UK Chelsea soccer team.
“You can see flotillas of shell companies that are designed [and] built by Cypriot financial providers to defend the ultimate owners of the assets from transparency and accountability,” said Shiel.
ICIJ said its team had more 270 journalists from 54 countries and one territory and provided access to the leaked records through its secure document-research platform, Datashare.
As part of the ICIJ’s data and research team, they combed records with partners to find sanctioned Russian oligarchs, billionaires and politically exposed persons (PEPs) to find offshore holdings.
“When the Russians came to Cyprus, they brought not only Russian corruption, they brought Russian organized crime, they brought Russian agents of the Russian intelligence services,” said Boris Demash, a Russian longtime resident of Cyprus and critic of Kremlin influence.
Cyprus-based economic historian Alexander Apostolides said the island’s politically wired professional firms seem to find ways to “do the things that are either illegal or at least unethical,” the report added.
A Cyprus government spokesperson said “since 2013, Cyprus has engaged in persistent efforts and has managed to stabilize its banking sector and become a top jurisdiction for both anti-money laundering and sanctions enforcement,” and has strict regulatory frameworks.
The spokesperson said that Cyprus now places in the top 25% of international anti-money laundering enforcement rankings, while the banking system has been “deleveraging significantly” by reducing exposure to Russian deposits, which stood at only about 4 percent of total deposits at the end of 2021.