According to journalists, even in the face of Western anti-war sanctions, Cyprus remained a centre of financial transactions for the benefit of Russian billionaires. The Cypriot authorities since 2014 have helped in money laundering for nearly a hundred Russians who are under Western sanctions in connection with the annexation of Crimea and the subsequent full-scale military invasion of Ukraine by the Russian Federation. Such findings are contained in the Cyprus Confidential investigation released by the ICIJ journalists’ association on Tuesday, 14 November.
More than 270 journalists from 54 countries and one territory of the world took part in the investigation. To identify illicit assets, they analyzed leaked internal documents dating from the mid-1990s to April 2022, including: financial statements, bank account applications and email messages.
How the “Cyprus model” works
“The island’s economic system, known as the ‘Cyprus model’, relies on a bloated financial sector with one of the weakest financial disclosure laws in the European Union, a lenient Central Bank and a surge of more than $200 billion of Russian investment that has provided oligarchs with enormous influence,” the reporters found.
They consider Nicos Anastasiades, who served as president of Cyprus from 2013 to early 2023, as a typical example of the “cronyism” that underpins the “Cyprus model”. As the authors of the investigation found out, before taking office as president, Anastasiades founded a law firm that provided offshore services and was very attractive to Russian clients.
Possible role of the former Cyprus president in money laundering by Russians
According to 2019 investigation by ICIJ’s media partner, the OCCRP Project, in the period before Anastasiades took office, his law firm had partners who were employees of “shell companies linked to alleged large-scale money laundering operations, including transactions linked to Putin allies”.
Upon taking office, Anastasiades left the firm to his two daughters and other partners and travelled to Moscow, where he met with Putin and entered into agreements favoring closer economic and financial ties, the authors recalled.
In response to an ICIJ enquiry, the firm founded by Anastasiades emphasized: “We would like to state categorically that no member of our law firm has been involved in any offence. These allegations are completely unjustified.”
Cyprus government response
According to investigators, since 2014, Cypriot firms have acted for a total of 96 Russians who found themselves under Western sanctions following the annexation of Crimea and Russia’s invasion of Ukraine. 67 of them are on Forbes’ 2023 billionaires list. The investigators believe that the Cypriot branch of PwC is also involved in helping Russian oligarchs, particularly Alexei Mordashov.
In total, journalists from ICIJ found about 800 companies and trusts registered in secret jurisdictions that were owned or controlled by Russians who have been under sanctions since 2014. Secret jurisdictions are countries and territories that provide a low-tax regime and anonymity for corporate owners, the authors explain.
In response to ICIJ’s questions, a Cypriot government spokesperson said that "since 2013, Cyprus has made persistent efforts and managed to stabilize its banking sector and become a leading jurisdiction for both anti-money laundering and sanctions enforcement”.