Cyprus sees Russian bank deposits plunge as government seeks to clean up its financial image

NICOSIA, Cyprus — Cyprus has made headway in weaning itself off Russian cash and business as it tries to clean up its image, according to official figures, while a visiting team of U.S. officials is helping the government look at cases of alleged violations of sanctions against Russia.

According to figures obtained by The Associated Press on Wednesday, Russian deposits held in Cypriot banks fell 76% from 2014 to 2022, while Ukrainian deposits shrank by 67%. The number of Russian clients using Cypriot banks dropped 82% in the same period, while Ukrainian clients fell by 54%.

For years, Cyprus was known as an ask-few-questions jurisdiction whose banks welcomed money from wealthy depositors, despite their shady connections. It was especially popular with Russia's wealthy oligarchs.

But that began to change following a 2013 financial crisis that brought the country to the brink of bankruptcy. Cypriot President Nikos Christodoulides, who took office in March last year, is vowing to enforce sanctions related to Russia's ongoing war in Ukraine. He says the country is committed to “being on the right side of history,” condemning Russia’s ongoing war in Ukraine.

According to the same figures, Cypriot banks severed business ties with nearly 60,000 customers — mostly Russian and Ukrainian nationals — between 2014 and 2022, while some 126,000 accounts have been suspended, amounting to approximately 40 billion euros ($43.5 billion).

Local media recently reported that several large Russian-owned companies registered in Cyprus have transferred their headquarters abroad owing to the scrutiny. It’s unclear which and how many of these companies have moved out of the country. Numerous AP requests for information from Cypriot authorities went unanswered.

Speaking after addressing the Council of Europe Parliamentary Assembly Tuesday, Christodoulides said Cyprus has fully implemented all European Union sanctions against Russia and challenged reporters to look through an EU report detailing which bloc members aren’t implementing them.

“I stand boldly before you and admit that mistakes were made,” Christodoulides said, referring to allegations of money laundering that had long dogged the island nation as well as a now-defunct investment-for-citizenship program that unlawfully issued passports to Russians and others.

“All this is now history for Cyprus … Mistakes have been made in the past and the first who paid for these mistakes were the Cyprus Republic and the Cypriot people themselves,” Christodoulides said.

Meanwhile, a team of experts from the U.S. Federal Bureau of Investigation and the Department of Justice is assisting Cypriot investigators with cases involving so-called “enablers” — lawyers and accountants who allegedly acted to help conceal the assets of sanctioned Russians and Russian-owned companies.

The invitation to the U.S. experts “is further evidence of the enhanced cooperation with our international partners on sanctions compliance to target those who have enabled sanctioned Russia oligarchs to hide their assets,” government spokesman Constantinos Letymbiotis told the AP.

Letymbiotis said that departing Russian bank deposits are offset by newly arriving international businesses. In 2022, more than 1,600 international companies registered in Cyprus – mostly in tech — including 47 multi-nationals.

He said in all, those companies helped create 36,854 direct and indirect jobs, up 42% from 2021.