Cyprus’s reputation as a tax haven and haven for Russian oligarchs, long complacent with regard to money of criminal origin, is well established. But a new investigation by the International Consortium of Investigative Journalists (ICIJ), published simultaneously by 69 media outlets, including The worldsheds a harsh light on the excesses and consequences of the Cypriot economic model.
Based on the leak of 3.6 million confidential documents from six Cypriot financial services firms – ConnectedSky, Cypcodirect Corporate Services, DJC Accountants, Kallias & Associates, MeritKapital and MeritServus – the “Cyprus Confidential” investigation confirms that the Mediterranean island has served as a gateway into the European Union (EU) for questionable financial flows.
Alerts had been given, year after year, by the anti-money laundering authorities, worried about repeated financial scandals. But, due to a lack of political will, the EU has allowed a territory to prosper within it allowing the large-scale registration of shell companies and largely irrigated by Russian money, that of the oligarchs who came to benefit from minimal taxation and of long-inflexible banking secrecy. Among the clients of the six Cypriot firms highlighted by this investigation, the ICIJ and its partners have identified 96 Russian personalities sanctioned by the West since 2014, linked to at least 800 distinct companies or trusts.
The “Cyprus Confidential” investigation
Opaque financial center, haven for Russian money, gray zone of the cyber economy: the “Cyprus Confidential” investigation tells how Cyprus, a small Mediterranean island, allowed itself to be overwhelmed by its offshore industry, becoming the weak link in the European Union in the fight against dubious financial flows.
This investigation is based on the leak of 3.6 million confidential documents from six Cypriot financial services firms (ConnectedSky, Cypcodirect Corporate Services, DJC Accountants, Kallias & Associates, MeritKapital and MeritServus) and the i-Cyprus company register . These “leaks” were obtained by the International Consortium of Investigative Journalists, the Organized Crime and Corruption Reporting Project and the German investigative media Paper Trail Mediawith the support of Distributed Denial of Secrets, a group of activists campaigning for transparency, then shared with sixty-nine international media outlets, including The world.
The “leak” reveals in particular the central role played by the MeritServus firm in the management of the offshore empire of Roman Abramovitch, a powerful businessman close to Vladimir Putin and former owner of the English football club Chelsea, holder of fourteen trusts. in Cyprus and around a hundred companies in tax havens.
“Urgent” transactions before sanctions
It also shows that the Cyprus branch of auditing giant PwC helped Alexei Mordashov, one of Russia’s wealthiest oligarchs, transfer more than $1.4 billion in assets to his wife in March 2022, as of following his placement under sanctions. The transaction was ultimately blocked and the funds remain frozen.
The same day, the multinational helped two other Russian billionaires, Alexander Abramov and Alexandr Frolov, carry out an “urgent” $100 million transaction between shell companies, shortly before their assets were frozen. Refusing to comment on these operations, PwC assures that it has respected all the rules in force.
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