Cyprus Finance Chief Under Pressure: Russian Citizenship Application Amid Fraud Scandal

In a series of controversial events, a top aide to Cyprus President Constantinos Petrides was placed at the heart of a financial fraud investigation in 2014.

The Investigation and the Pressure to Approve

During a private meeting, two senior officials from RCB Ltd., one of Cyprus’ biggest banks, urged Petrides to approve the citizenship application of a Russian national. Allegations state that this individual was under European Union sanctions. The officials reportedly pressured Petrides, warning of a potential rift between Cyprus and Russia if he failed to comply. However, the details regarding the application’s ultimate outcome, the Russian national, and the significance to the senior RCB officials remained undisclosed, according to a Cyprus government report obtained by the Organized Crime and Corruption Reporting Project (OCCRP). The application was linked to the country’s criticized “golden visa” program.

RCB: Ties to the Kremlin and The European Central Bank (ECB)

RCB, an establishment closely associated with the Kremlin, had been using its position as a European Union supervised institution to expand its operations in Cyprus. With Russia’s invasion of Ukraine in 2014, the ECB ended its partnership with RCB, which was facing the possibility of unwinding despite holding considerable liquidity and capital.

The Web of Russian Investments in Cyprus

For years, Cyprus’ proximity to Russia had enticed Russian oligarchs and businesses to invest substantially within the European Union member state. As of 2020, the Center for the Study of Democracy in Sofia reported that Russians had invested over €200 billion in Cyprus, making it the greatest European investor in the small island nation. Russian economic dominance in Cyprus produced intricate connections between Moscow and the financial industry, including banks, lawyers, accountants, and offshore service providers.

The Intricate Web of Connections

These firms were deeply intertwined with Cyprus’ political class, constructing Europe’s most stringent corporate secrecy laws that safeguarded the interests of the system, rather than acting as regulatory bodies. From 2013 to 2015, Cyprus’ then-president, Nicos Anastasiades, was the founder of a prominent offshore service provider. OCCRP discovered that his law firm’s partners served as officials of shell companies linked to massive suspected money-laundering operations.

The European Union’s Struggle to Address Money Laundering

Despite financial scandals rocking Europe in 2018, such as the collapse of Latvia’s ABLV Bank and the Danske Bank scandal, Cyprus’ financial institutions remained connected to Russian money. The EU grappled with money laundering and the potential effects on financial stability, leaving investigative bodies like OCCRP and ICIJ to reveal the complex dynamics between European money hubs and Russian influence.