Uncovering the Movement of Millions: Inside the Investigation into Oligarchs and Cyprus During EU Sanctions And What It Means For Businesses
Newspapers have recently published an investigation revealing that Russian oligarchs transferred hundreds of millions of dollars in assets from Cyprus while the European Union and other countries were imposing sanctions following the Russian invasion of Ukraine. Wealthy Russians have been using Cyprus as a way to move their wealth from their country into Europe for a long time. As an offshore financial center, Cyprus, which is an EU member, has played a major role in this regard. It's important to note that holding assets in offshore havens like Cyprus, often through trusts, is legal and acceptable for some people for valid reasons.
What are the "Cyprus Confidential" files in the context of EU Sanctions?
The Cyprus Confidential files comprise a collection of leaked documents that consist of emails, bank records, corporation filings, trust paperwork, and compliance reports. The documents, which amount to 1.31 terabytes of private financial information, include over 3.6 million records and other documents. These records are sourced from six offshore service providers that specialize in creating, managing, and listing shell companies and trusts in Cyprus. Additionally, one of the companies provides access to information on Cypriot firms. Paper Trail Media, the ICIJ, and the Organised Crime and Corruption Reporting Project made the documents available to the Guardian and other media outlets.
What source for the Cyprus Confidential Files?
In 2018, the International Consortium of Investigative Journalists (ICIJ), in collaboration with German media, obtained a trove of 3.6 million files from an anonymous source identified as "Cyprus Confidential". The files contained sensitive information about the offshore financial dealings of various individuals and organizations. The ICIJ and German media shared the files with a network of over 90 journalists from 30 countries to analyze and report on their findings. The resulting publication, known as the Cyprus Papers, shed light on the extent of tax avoidance and financial secrecy in the global financial system.
What are the key findings of the "Cyprus Confidential" files and how are they undermining EU sanctions?
The majority of the files were created in the mid-1990s and between 2022 and 2022.
The papers expose the nearly 800 companies and trusts identified in tax and secrecy havens that were owned or controlled by Russians who have been under sanctions since 2014—the year Russia took Crimea.
There are over 650 Cyprus businesses and trusts among them.
The files detailed the role played by top accountants, and other advisors in managing transactions as Vladimir Putin's forces launched their assault.
The files shed light on potential regulatory breaches pertaining to the funding of football clubs and how opaque offshore structures operated by the corporate service providers and accountants of the EU member state might have allowed unreported payments to a well-known western journalist.
Can you provide concrete examples of how the "Cyprus Confidential" files illustrate how easily money can be moved into the EU?
From reading the sources cited below, we have learned that Alexei Mordashov, one of Russia's wealthiest billionaires, attempted to transfer a hefty sum of £1 billion into a publicly listed company on the same day he was hit with EU sanctions. Mordashov, along with PwC Cyprus and other advisers, made the transfer, which is now the subject of an "ongoing" criminal investigation in Cyprus.
In a separate development, a prominent German author, who is an expert on Russia, received €600,000 in undisclosed payments from companies linked to Mordashov to publish two books promoting Putin.
During Roman Abramovich's tenure at Chelsea football club, he made payments running into tens of millions of dollars to scouts, agents, and club executives in foreign countries. These payments could have flouted the club's strict accounting and financial fair play policies. Additionally, there are unknown contracts that grant Abramovich and super-agent Pinhas Zahavi control over the careers of twenty-one young football players through questionable third-party ownership systems similar to bonded servitude.
Following inquiries into this matter, the Cyprus Finance Ministry confirmed that it has launched a criminal investigation into the transfer of Mordashov's stake in Tui, Europe's largest tour operator. Mordashov's name was added to the EU's list of sanctioned individuals on February 28, 2022, and it is believed that his advisers attempted to transfer his £1 billion stake to his long-term partner, Marina Mordashova, on that day.
What was the impact of the "Cyprus Confidential" files?
The leak has raised concerns over the role of the EU state in managing Russian fortunes. It is the largest-ever financial data leak from Cyprus raises concerns about the supervision of Russian riches by EU member states.
What connection between Cyprus and Russia?
The degree to which Cyprus served as a gateway to Europe for the elite with connections to the Kremlin is shown by the leak. We understand that two-thirds of the 104 Russian billionaires named by Forbes magazine in 2023 have family members who are clients of the island's professional service providers. Data shows that 71 Russian consumers have been the target of sanctions since February 2022. Many of these links have since ceased, according to advisors.
Is this new? Didn't anybody know about this?
In May 2023, the US government provided Cyprus with an 800-page document containing information about individuals and entities in Cyprus that may have helped Russians conceal their assets. The purpose of this document was to assist in the prosecution of those who enabled the Russians to do so and who are subject to US sanctions.
What steps can businesses take to avoid becoming involved in schemes to avoid sanctions?
Avoiding involvement in schemes to avoid sanctions is crucial for individuals and organizations alike. These schemes not only undermine international efforts to promote peace and stability but also have severe legal and financial consequences. Being associated with such activities can tarnish one's reputation, damage business relationships, and even result in criminal charges. Therefore, it is essential to stay vigilant and ensure compliance with sanctions laws to maintain integrity and mitigate potential risks.
Introduce the steps businesses can take to prevent such involvement
Businesses can take several steps to prevent involvement in illicit activities and ensure compliance with sanctions laws.
Firstly, they should establish a robust due diligence process to carefully screen potential partners, customers, and suppliers. Conducting thorough background checks and monitoring transactions regularly can help identify any suspicious activities. One easy way to achieve this is to sign up to the trade intelligence updates of Customs Manager Ltd to keep you abreast of what is changing in the world of export controls and sanctions, including money laundering.
Secondly, businesses should invest in employee training programs to educate their staff on the risks and consequences of non-compliance. This will help create a culture of compliance and empower employees to recognize and report any potential violations. We train on export controls and sanctions. Please visit www.customsmanager.org/events.
Additionally, implementing strong internal controls, such as regular audits and risk assessments, can help detect and prevent any inadvertent involvement in sanctioned activities. We can help with all of this. Please e-mail email@example.com
4-In-1 Support Services: How to get more support
1. Customs & Global Trade Updates (Fee Subscription): www.customsmanager.info
2. Customs & Global Trade Consultancy & Advice (Free First Call): https://www.customsmanager.org/consultancy
3. Customs & Global Trade Training & Education: https://www.customsmanager.org/education-training
4. Compliant & efficient UK Customs Clearance: https://www.customsmanager.org/customs-agent
Connect with us on socials
Get in Touch
· Website: www.customsmanager.org
· E-Mail: firstname.lastname@example.org
About Customs Manager’s Customs & Global Trade Intelligence Services
The Premium Professional Legislative Monitoring Service (PLM) is a research and curation service which checks for legislative updates from official government websites based on the selected jurisdictions and topics. Paid Plan subscribers can access regular law change notifications to ensure they never miss a significant legal change on www.customsmanager.info – a website dedicated to customs & trade intelligence. At the same time, they save valuable time by engaging our dedicated trade specialists to carry the monitoring out for them. Premium subscribers also unlock all content on the Customs Manager’s Ltd. website, including our Customs & Trade Blog on www.customsmanager.info , providing vital thought leadership development services to empower them to trade effectively, efficiently and, of course, compliantly, across borders. Premium Subscribers can add jurisdictions and topics for an additional charge.
About Customs Manager Ltd.
We aim to empower people with import, export and transport responsibilities with helpful advice, insightful training and relevant trade intelligence services. We devote all our passion and energy to helping businesses grow faster cross-border. Working with us means having your own multilingual Customs Manager on standby to help you trade effectively, efficiently and, of course, compliantly wherever you want to go. Includes Brexit support and the ability to lodge customs declarations and making sense of rules of origin, customs classification and customs valuation to make but a few.
Customs Manager Ltd. owns the copyright in this document, except for external documents and links we refer to or make available.
You are not allowed to use this information in any way that infringes its intellectual property rights. You may have to hold a valid licence to use this information. A licence can be obtained by becoming a Paid Plan subscriber to the Customs Managers’ Customs & Trade Intelligence service, also known as Professional Legislative Monitoring (PLM). As a Paid Plan subscriber, you may download and print this information which you may then use, copy or reproduce for your internal non-profit-making purposes. However, you are not permitted to use, copy or reproduce this information to profit or gain. In addition, you must not sell or distribute this information to third parties, not members of your organisation, whether for monetary payment or otherwise. This information is intended to serve as general guidance and not constitute legal advice. The application and impact of laws can vary widely based on the specific facts involved. This information should not be used as a substitute for consultation with professional legal or other competent advisers. Before making any decision or taking action, consult a Customs Manager Ltd. professional.
In no circumstances will Customs Manager Ltd be liable for any decision made or action taken in reliance on the information contained within this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.