Cyprus is a small Mediterranean island known for its sandy beaches and history. After the fall of the Soviet Union, wealthy Russians, including oligarchs who had acquired their wealth through illegal means, began to use Cyprus as a place to hide their assets and avoid taxes. The island nation historically built a financial system to attract overseas wealth, which made it an ideal location for money laundering and hiding assets. In 2013, the country introduced a citizenship by investment program, which allowed foreigners to invest over 2 million euros in the country and get a Cypriot passport, which is a coveted possession because Cyprus is part of the European Union. However, in 2020, the program was shut down after it was revealed that hundreds of golden passports had been illegally issued, some to criminals and fugitives.
The Hunt for Russian Oligarchs’ Billions: How Cyprus Became a Haven for Wealthy Russians
After Russia launched its invasion of Ukraine, the U.S and its allies responded with sanctions targeting companies, oligarchs, and officials with ties to Russian President Vladimir Putin. Headlines trumpeted the trophies of Russian oligarchs’ seized throughout Europe – yachts in Italy, villas in the south of France, and priceless art in Germany. But those fixed assets are relatively easy to locate – finding the billions of dollars oligarchs have stashed around the world is proving to be more difficult. How do you hide that much money from an international community that says it’s determined to find it? The question led us to Cyprus, a tiny Mediterranean island at the crossroads of Europe, Asia, and the Middle East.
Today, the once-bustling vacation spot is in the middle of an international game of hide and seek. A poet once described Cyprus as a golden green leaf thrown into the sea. The island, just 140 miles long, is wrapped in sandy beaches and a rich history. These turquoise waters, according to legend, were the birthplace of Aphrodite. But today, the playground of the gods has become a playground for wealthy Russians. We headed down the southern coast of the island to Limassol, a favorite spot for Russians to thaw a three-hour flight from Moscow. Limassol’s mix of designer shops, first stores, Cyrillic signs, and stores serving caviar earned it the nickname Moscow on the Med.
But Alexandra Atalidis, a member of the Cyprus Parliament, says that after the fall of the Soviet Union, the oligarchs who descended on the island weren’t there for the beaches. “There are beautiful beaches in Spain, in Portugal, in Greece. There are a lot of beautiful beaches. I think they found a fertile ground here that helped them,” she said. “How did the Russian oligarchs use Cyprus after 1989 when they stole the property of the Russian people and they started to build their empires? And then maybe they were afraid that someday something will happen, so they wanted their assets to be saved outside Russia. So they were looking for tax havens, and we had a very low tax rate at that time. They got a place to hide their assets.”
Myra Martini, an analyst for Transparency International, a non-profit that tracks money laundering around the world, says that for decades, if you were an oligarch or just a shady character looking to hide your rubles, Cyprus was hard to beat. “It offers secrecy and still security and that’s what criminals and corrupt individuals are usually looking for,” she said. “In Cyprus, for many years, you could open a bank account without having a lot of questions asked. You can open a company without having a lot of questions asked, meaning you can put the money there without needing to tell who you are or where the money comes from.”
Cyprus became as famous for its opaque banking as its clear water. Soon, like sunstar tourists, foreign money started pouring into the island. By 2012, the country of about a million residents had amassed bank deposits of nearly 72 billion euros. About 30 percent of those bank deposits came from Russian nationals. But in 2013, the tide turned. The debt crisis in neighboring Greece threatened to sink the Cyprus economy. Lawmakers, fearing the country would lose all that Russian capital, pushed a scheme other countries had used to attract wealth – a citizenship by investment program.
