Cyprus Implicated in Massive Laundering of Sanctioned Russian Funds
Cyprus plays an important role in concealing the wealth of Russian oligarchs. This is happening even after the start of the full-scale Russian war in Ukraine. At the same time, the European Central Bank does not have sufficient leverage to control the Cypriot banking system, according to a study by the International Consortium of Investigative Journalists (ICIJ) called Cyprus Confidential.
The largest ever leak of financial data from Cyprus raises concerns about the role of the EU state in managing Russian wealth. In particular, the leading role of PwC Cyprus' chief accountants and other consultants in managing transactions during the Russian attack on Ukraine has been revealed in 3.6 million files handed over by an anonymous source to the International Consortium of Investigative Journalists (ICIJ).
According to the information, Russian oligarchs moved their assets to Cyprus after Russia's invasion of Ukraine.
"Cyprus plays an even more important role than has been known in the transfer of dirty money on behalf of Russian President Putin and other dictators," the investigation says.
The information also sheds light on how opaque offshore structures run by accountants and corporate service providers in an EU member state could have provided undisclosed payments to an influential Western journalist and possible breaches of football club funding rules.
The leak revealed the extent of Cyprus' role as a gateway to Europe for sanctioned Russian oligarchs. Of the 104 Russian billionaires identified by Forbes magazine in 2023, two-thirds are listed, along with family members, as clients of Cyprus' professional service providers.
There are records of 71 Russian clients who have been sanctioned since February 2022.
Among other things, Cypriot confidential files are being disclosed:
PwC Cyprus and other consultants helped one of Russia's most powerful oligarchs, Alexey Mordashov, to transfer £1 billion to a public company on the day EU sanctions were imposed on him. The Guardian reported that the transfer is the subject of an "ongoing" criminal investigation in Cyprus.
600,000 euros in undisclosed payments from companies linked to the same oligarch to an influential German journalist considered a leading expert on Russia to support the publication of two books on Putin.
Tens of millions of offshore payments made by Roman Abramovich during his ownership of Chelsea Football Club to agents, scouts and club officials who may have breached strict football accounting and financial fair play rules.
Undisclosed deals that allowed Abramovich and super agent Pinchas Zahavi to control the careers of 21 young footballers through controversial third-party ownership arrangements that have been compared to bonded labour.
In response to the publication of the investigation, the Cypriot government promised a "zero-tolerance approach" to sanctions violations as it fights to maintain its status as a financial centre.