The “financial fixers” who are accused of assisting Russian oligarchs Roman Abramovich and Alisher Usmanov in concealing their assets have been sanctioned by the UK government.
The Foreign Office issued sanctions on April 12 that are aimed at people they refer to as “oligarch enablers”—those who intentionally help billionaire businessmen conceal their wealth.
In the weeks before the invasion, 10 of Abramovich’s covert offshore trusts were altered to transfer the beneficial ownership to his seven children, raising concerns about whether the modifications were meant to protect the oligarch’s substantial fortune from the possibility of asset freezes.
Reputation is everything
However, the US and UK sanctions also represented something else: the understanding that, in the words of the Cypriot government spokesperson, “Cyprus’ name as a reliable, financial and business center” was what was at stake. Ten years after the most easterly member of the EU almost avoided economic collapse during a banking crisis that revealed the depth of the tiny island’s dependence on Russian currency, its financial integrity once again appeared to be in jeopardy.
The government spokesperson, Konstantinos Letymbiotis, stressed that the “nation’s credibility must be safeguarded” and that any departure from EU sanctions will not be accepted by Wednesday 12th, when a national sanctions implementation unit had been announced. The establishment of the new facility will have technical assistance from the UK.
The largest lender on the island, the Bank of Cyprus, confirmed that approximately 10,000 accounts belonging to 4,000 Russian depositors would be closed. This news came as rumors circulated that additional Cypriots and businesses with a base in Cyprus would be added to sanctions lists compiled by London and Washington to further punish Russia for its war in Ukraine. It was stated in a statement that all impacted account holders had been advised of the choice.
If you are an EU member you have to act correspondingly
The closures are seen as going “above and beyond” limitations on Russian bank owners elsewhere in the EU, where depositors have had their transfers blocked and transactions exceeding €100,000 are prohibited but have not been required to cancel accounts. Insiders claimed that the lender’s choice was made before the most recent wave of US and UK penalties. However, they also admitted in private that “it did not have to be taken.” The Russians were informed that they have two months to find another solution, which is described as typical bank procedure.
Undoubtedly, the bank was concerned about appearing to violate sanctions and maybe being added to the list of specially designated nationals and prohibited persons maintained by the US Department of the Treasury.
How the Russians found out about the offshore
Abramovich was one of the billionaires who chose to lodge money on the island, joining others who would go on to accumulate billions soon after the catastrophic dissolution of the USSR. These billionaires frequently hid assets through a complex network of brass-plate corporations and locally run trusts. Following the contentious “golden passport” program’s implementation in 2013, which allowed citizenship in exchange for real estate investments of €2 million or more in the nation, over 1,000 Russians were granted Cypriot citizenship. The scheme, which brought opulent real estate projects to Limassol, a coastal city with approximately 60,000 Russian residents, was credited with generating an estimated €7 billion before being suspended in 2020 as a consequence of an outcry from EU officials.
Photo: A Russian bookstore and a Russian beauty salon in Limassol. Photographer: Sean Gallup/Getty Images