Financial Crime World

Cyprus’ Golden Visa Scandal: How RCB and European Banks Became Cogs in Russia’s Financial Machine

In the heart of the Mediterranean, Cyprus has long been a haven for Russian money, with its banks and business elite deeply intertwined with the Kremlin. This relationship grew significantly in the mid-2010s, as Cyprus became a crucial part of Russia’s financial machine.

RCB and the Kremlin Connection

Two senior officials from one of the biggest Cypriot banks, RCB Ltd., reportedly attempted to pressure a high-ranking Cyprus government official, Constantinos Petrides, to approve the citizenship application of a Russian national, suspected of being under EU sanctions. RCB’s ties to the Kremlin were undeniable. Former Russian President Vladimir Putin himself once referred to it as a “subsidiary” of Kremlin-controlled Vneshtorgbank.

  • RCB and Its Russian Oligarchs Russian oligarchs, including major shareholders of Cyprus’ biggest bank, the Bank of Cyprus, held considerable sway.

  • European Central Bank’s (ECB) Role The ECB oversaw and directly supervised these banks, granting them credibility in the Western financial world.

The Golden Visa Program and Money Laundering

The golden visa program, under which 2,869 Russian nationals received EU citizenship, became a conduit for generating about $7 billion for the tiny island nation. By 2020, an estimated $200 billion had been “invested” by Russians in Cyprus - half of Russia’s entire investment in Europe. The interconnected political class erected stringent corporate secrecy rules to protect the system. Cyprus was now not only a gateway for Russian wealth to flow into Western financial systems but also a major money-laundering hub.

Cyprus’ Political and Economic Landscape

Cyprus’ political and economic landscape was heavily influenced by these powerful financial players. The result was an interconnected network of banks, offshore service providers, accounting firms, tax planners, and an army of 4,000 lawyers. Despite the Central Bank of Cyprus’ role as a regulator, it acted more as a protector.

  • Nicos Anastasiades and His Ties Nicos Anastasiades, founder of a major offshore service provider and former president of Cyprus, is a prime example of this symbiotic relationship.

The ECB and RCB During the Crisis

In the wake of Russia’s invasion of Ukraine in 2022, the ECB announced “decisions” to help unwind RCB despite its abundant liquidity and capital, leaving many observers questioning the bank’s sudden exit from the business.

Conclusion

Analysts describe the Cyprus model as a beating heart of Putin’s financial circulatory system, with Russian assets being stored in the West as financial assets, yachts, luxury real estate, or reinvested back into Russia’s economy, all while undermining and corrupting democratic institutions in the West. The historical link between the two nations, rooted in shared religious beliefs and cultural ties, allowed Russia to exploit Cyprus’ vulnerable regulatory framework and expand its influence within the European Union.

As the international community continues to investigate the Cyprus model, it remains a pressing question why such an expansive money-laundering operation could flourish within the EU and under ECB supervision.