Financial Crime World

Cyprus’ Golden Visa: A Conduit for Financial Crime and Corruption Connected to Russia

Cyprus, a Mediterranean island nation, has been mired in allegations of financial crime and corruption involving senior Russian officials and the country’s political elite. This issue came to light during a 2014 encounter between two senior officials of the Russian Commercial Bank (RCB) in Cyprus and a top aide to Cyprus’ president, Constantinos Petrides.

The 2014 Encounter

The meeting between the Russian officials and Petrides was not about banking business but instead focused on pressuring the president to approve the citizenship application of a Russian national under EU sanctions. The intense discussion led one of the officials to accuse Petrides of being a traitor for not wanting to naturalize the person in question.

Russian Influence in Cyprus’ Financial Sector

The Russian connection in Cyprus’ financial sector runs deep; its major banks maintain close ties to the Kremlin. Putin once referred to RCB as a “subsidiary” of the Kremlin-controlled Vneshtorgbank (VTB). Furthermore, an oligarch has been a significant shareholder of the country’s largest bank, Bank of Cyprus, since its Privatization in 2009.

The Role of the European Central Bank (ECB)

The European Central Bank (ECB) has regulated the banks in Cyprus, granting them a critical advantage. With the ECB’s licensing and direct supervision, these banks were able to expand their customer base in Cyprus. The “Cyprus model” saw Russian wealth being channeled to the West, fueling a real estate and lending boom.

Cyprus: The Beating Heart of Russia’s Financial System

Cyprus became the heart of Putin’s regime’s financial circulatory system, allowing assets to be stored or reinvested in the Russian economy or used to undermine democratic institutions in the West. Despite international outrage over the Magnitsky scandal, Russian money continued pouring into Cyprus, with reports suggesting an investment of over $200 billion as of 2020.

Intertwined Connections Between Russian Oligarchs and Cyprus’ Political Elite

Former president of Cyprus, Nicos Anastasiades, had close ties to Russian oligarchs during his presidency from 2013 until 2023. Partners in his law firm were officials of shell companies involved in significant money-laundering operations. Anastasiades denied any wrongdoing but admitted to reducing Russian deposits from 40% in 2013 to 2.2% by the end of 2022, as well as suspending over 43,000 shell companies and closing over 123,000 bank accounts belonging to Russians.

Persistent Russian Control Over Cyprus’ Banking Sector

Despite efforts to reduce Russian influence, Russian oligarchs reclaimed significant power within the Bank of Cyprus by 2013. This complex web of money and power raises questions about the EU’s influence, oversight, and ability to prevent financial crime and corruption.

  • Russian officials pressure Cyprus’ president to approve citizenship applications
  • The deep-rooted Russian influence in Cyprus’ financial sector
  • European Central Bank’s role in facilitating money laundering
  • Cyprus as the beating heart of Russia’s financial system
  • Ties between Russian oligarchs and Cyprus’ political elite
  • The persistence of Russian control over Cyprus’ banking sector