Cyprus Moves to curb Ruble Transactions and scrutinize Russian-linked Firms
Cyprus authorities instructed local banks to halt transactions in rubles and to tighten dealings with customers connected to Russia. The move also includes heightened oversight of law firms that offer accounting services, assist Russians with obtaining residence permits, provide tax deductions, and help with rapid business registration. These steps come after Cyprus welcomed a delegation from the United States comprised of FBI and FinCEN personnel who will partner with local authorities to review 29 cases of potential sanctions evasion.
Cyprus Confidential
The Cypriot government has moved to ban ruble transactions in an effort to restore the country’s business reputation following the Cyprus Confidential report. The investigative piece, published in November 2023, draws on a leaked trove of more than 3.6 million documents from Cypriot companies. Journalists uncovered how some firms helped Russian entrepreneurs manage assets and navigate sanctions.
According to the ICIJ report, the services offered by these firms were used by many of the Russian billionaires listed by Forbes. The data show that hundreds of trusts were registered or controlled by Russians facing sanctions in 2014. The Cyprus branch of PricewaterhouseCoopers along with other sources indicated that professionals played a role in moving assets, including a notable transfer of 1.4 billion euros to a trustee account associated with a major Russian business figure.
Among the individuals named in the leak were Roman Abramovich and his partners Alexander Abramov and Alexander Frolov, as well as Pyotr Aven, a former Alfa Bank board member.
Close Accounts
Even before the Cyprus Confidential material surfaced, the Bank of Cyprus, the largest financial institution on the island, began notifying Russian customers that their accounts would be closed. Forbes reported that the bank aimed to complete closures within two months, with the criteria for decision including tax residence in Russia, income from a sanctioned business, and the type of residence permit held. Legal experts noted that Western sanction concerns could have influenced these actions.
The Bank of Cyprus later confirmed that the closures were linked to the suspension of Russia’s membership in the Financial Action Task Force. The bank also indicated that the action would affect roughly four thousand Russians who do not reside within the European Union.
On April 12, the United States and the United Kingdom expanded their sanctions lists to include twenty three Cypriot passport holders, with only ten born on the island. The additions were interpreted as a move to curb potential sanction evasion. Financial intermediaries connected to Russian business interests were also named in the updated listings.
Following these developments, the Cypriot President convened an emergency meeting with the Attorney General, the Minister of Finance, the head of the Foreign Affairs Ministry, and the central bank representative. In the post-meeting statement, the president emphasized the seriousness of including Cypriot citizens and companies on sanctions lists.
Commenting on account closures, financial analyst Giorgos Georgiou indicated that the Cypriot economy may be at the conclusion of a prosperous era centered on Russia-based service sectors.