Russia's largest offshore in Europe is lost: Cypriot banks close accounts of 82% of Russian clients

The largest offshore of Russian business in Europe, where tens of billions of dollars of commodity surplus revenues flowed in the "rich" years before the annexation of Crimea and sanctions, has closed its doors to Russians.

Between 2014 and 2022, Cypriot banks closed the accounts of 82% of clients from Russia, the Associated Press reports, citing statistics from local financial authorities.

The volume of deposits held by Russian citizens and companies in Cypriot banks decreased fourfold (by 76%) over the same period.

In total, 126,000 accounts, mainly of clients associated with Russia, were closed in the island republic's banking system, and 60,000 individuals and legal entities were denied banking services. The authorities estimate the amount of funds "expelled" from Cyprus at 43.5 billion euros.

Cyprus' close ties with Russian capital are history, President of the Republic Nicos Christodoulides said in a speech to the Parliamentary Assembly of the Council of Europe (PACE) on Tuesday.

"I recognize that mistakes were made," he said, commenting on allegations that dubious money of Russian origin had been laundered in Cyprus for years. According to Christodoulidis, the "golden passport" program, through which Cypriot citizenship was issued for investments in the republic's economy, was also a mistake.

In the spring, the Cypriot authorities launched an investigation into the Russian presence on the island, opening a total of 29 cases after the United States and the United Kingdom imposed sanctions in April against 13 companies and individuals found to be hiding oligarchs' assets. Among them were Roman Abramovich and Alisher Usmanov.

It was reported that in December, a "landing party" of FBI agents and the U.S. Treasury Department's Financial Crimes Enforcement Network arrived in Cyprus to help local authorities figure out ways for Russians to avoid sanctions. One of the main cases is the re-registration by billionaire Severstal owner Alexei Mordashov of his stake in the German tour operator TUI a few minutes before the publication of the EU sanctions list.

Under the threat of tough measures, at least 10 large Russian companies have left Cyprus over the past six months. Among them are TCS Group Holding, the parent company of Tinkoff Bank; Etalon Group, one of the largest developers in Russia; Transmashholding, the largest producer of railway and urban rail transport in the CIS; HeadHunter recruitment service; and Ozon online retailer.