Cyprus: A European Haven for Financial Crime and Corruption - The “Cyprus Confidential” Investigation
By Léa Girardot, Le Monde
Cyprus: An Attractive Destination for Money Laundering and Corrupt Practices
The Mediterranean island of Cyprus, known for its tax advantages, golden visas, and judicial leniency, has long been a popular destination for money laundering and corrupt practices. The latest investigation led by the International Consortium of Investigative Journalists (ICIJ) and published by 69 media organizations, including Le Monde, provides further evidence of how the island’s economic model has allowed such abuses to thrive in the European Union (EU).
Cyprus: A Gateway for Dubious Financial Transactions within the EU
With its reputation as a tax haven and a favorite spot among Russian oligarchs, Cyprus has become a gateway for illicit financial deals within the EU. The “Cyprus Confidential” investigation, which was based on the leak of 3.6 million confidential documents from six Cypriot financial services firms, confirms that the island is a hotspot for money laundering and corrupt practices.
Firms Involved in the Scandal:
- ConnectedSky
- Cypcodirect Corporate Services
- DJC Accountants
- Kallias & Associates
- MeritKapital
- MeritServus
Warnings Ignored: The EU’s Lack of Political Will to Address Cyprus’ Financial Scandals
Despite stern warnings from anti-money laundering authorities, the EU has allowed Cyprus’ dangerous business to continue operating within its borders due to a lack of political will. In Cyprus, shell companies can be registered in large numbers, and Russian money flows abundantly. Among the clients of the six Cypriot firms uncovered by this investigation, ICIJ and its partners discovered 96 Russian individuals who have been sanctioned by the West since 2014 and are linked to at least 800 separate companies or trusts.
The i-Cyprus Company Register and the Leaks from the Six Financial Services Firms
The i-Cyprus company register and the leaks from the six financial services firms were the foundation for the extensive reporting on Cyprus’ role in enabling money laundering and corrupt practices. The documents were obtained by the International Consortium of Investigative Journalists, the Organized Crime and Corruption Reporting Project, and German investigative outlet Paper Trail Media. With the support of Distributed Denial of Secrets, the leaks were then shared with 69 international news organizations, including Le Monde.
Russian Oligarchs and Cyprus: Roman Abramovich and His Offshore Empire
The investigation sheds light on the central role of the MeritServus cabinet in managing the offshore empire of Roman Abramovich, a powerful Russian businessman close to President Putin and former owner of the English football club Chelsea. Abramovich holds 14 trusts in Cyprus and around a hundred companies in tax havens.
PwC’s Role in Aiding Russian Billionaires’ “Urgent” Transactions
Moreover, the Cyprus investigation highlights how international giant PwC aided two Russian billionaires, Alexander Abramov and Alexandr Frolov, to carry out an “urgent” $100-million transaction between shell companies just days before their assets were frozen. PwC has declined to comment on these transactions but insists they complied with all applicable regulations.
The Consequences of Cyprus’ Economic Model for the EU
These instances illustrate the overreach of Cyprus’ economic model, which heavily relies on a hyperactive financial sector that depends significantly on Russia. Cyprus, once prosperous, now faces the danger of being dragged down by these illicit financial practices and the potential consequences for the entire EU.