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FBI to Help Cypriot Police Investigate Sanction-busting for Russian Oligarchs

FBI agents tasked with investigating sanctions-busting have been dispatched to Cyprus as the global crackdown against Russian oligarchs, and the web of enablers who have helped hide their wealth, intensifies.

The 24-strong team was expected to start “assisting Cypriot police” with immediate effect after arriving on the eastern Mediterranean island late Sunday.

“They are here,” said government spokesperson Yiannis Antoniou, explaining that once security clearance issues were resolved the agents would hit the ground running. “The idea is that they start assisting Cypriot inspectors as soon as possible. They have the knowhow.”

American investigators will question how local lawyers and accountants helped shield Kremlin-linked business people from punitive EU measures following Moscow’s invasion of Ukraine, after last month’s publication of Cyprus Confidential, an investigation by the Guardian and international reporting partners, raised concerns about potential breaches.

Cypriot authorities are understood to be likely to request particular assistance in the case of Alexei Mordashov, the Russian steel, mining and banking magnate who attempted to transfer a £1bn stake in TUI travel company shares on the day he was placed under sanctions.

The transaction was revealed in the biggest ever leak of financial data from Cyprus, a cache of 3.6m files from the archives of key offshore service providers on the island. Spanning two decades, the leaked data shone a light on transactions that took place in the weeks and months after sanctions were introduced against Russia and its oligarchs after the invasion of Ukraine.

The accountancy firm PwC Cyprus, whose clients included Mordashov, was found to have assisted the tycoon in moving assets on the day he was named on the EU sanctions list. “It’s a serious case and we need to get to the bottom of it,” said Antoniou. “Cypriot authorities have been investigating it since May but there are questions that need to be answered.”

PwC has said that, while it cannot comment on particular clients, it takes the application of sanctions “extremely seriously”. The firm said that in March 2022, after the sanctions on Russia, “PwC introduced a policy, that goes beyond what is legally required, of applying all sanctions imposed by major countries across the PwC network, irrespective of the sanctions country of origin”.

A spokesperson for Mordashov said: “Not once in his long career did Mr. Mordashov, or any of the companies he runs, breach any laws, whether in Europe, Russia, or any other jurisdictions.

“This includes the mentioned share transfers. All information and regulatory notifications with respect to the TUI share transfer were duly disclosed to the relevant authorities and made public to the extent legally required shortly after the share transfer, which clearly demonstrates that there was no intention to hide something or to circumvent the laws.

“Regarding the sanctions against Mr. Mordashov and his companies – they are entirely unfounded and unjust, running counter to international legal norms, not to mention common sense.”

The incoming American team includes experts from the US Treasury’s financial crimes enforcement network (finCEN), which specialises in sanctions violations and money laundering through analysis of bank transactions.

The arrival of the agents comes less than eight months after the EU’s most easterly member state was left reeling from US and UK sanctions slapped on an array of individuals and entities for enabling transactions by business people later sanctioned for profiting from and supporting Putin’s regime.

The Cypriot president Nikos Christodoulides, who assumed office barely a month earlier, has repeatedly declared “zero tolerance” for sanctions breaches. Sources said he had requested the US send in the team not only because Nicosia’s relations with Washington were “at their best ever” but as part of efforts to safeguard his country’s credibility as an international financial centre.

Senior industry officials had also called on local authorities to take action.

Michael Sarris, the former finance minister who oversaw Cyprus’ entry into the eurozone, told the Guardian: “The government needs to show the political will to challenge the interest groups who have benefited financially from the fact that so many people were operating on the margins of legality. To my mind our problem is not so much the lack of technical knowhow but the will to get things done.”

Prior to the Russian leader launching his “special operation” in Ukraine in February 2022, the island had been a close ally of Moscow, bonded as much by shared cultural traditions and a common Orthodox religion as vibrant financial ties. Its large expat Russian community, coalesced around the coastal city of Limassol, had long earned the sunshine island the moniker of “Moscow on the Med”.

Christos Andreou, chief spokesperson of the nation’s police force, welcomed the agents’ arrival saying Cyprus’ financial crime squad had been investigating 29 cases of potential financial impropriety since the Anglo-American sanctions were announced but was nowhere near concluding its inquiries. Among them were instances of sanctions violations that had been reported by the Institute of Certified Public Accountants of Cyprus (ICPAC), it emerged.

“Their presence here is welcome,” Andreou said in a telephone interview. “We have several investigations under way and some are very complex indeed. My hope is that we’ll be able to send files of our findings in a few of the cases to the attorney general [Cyprus’ most senior legal authority] by the end of the year.”

The Cypriot government appears to have set a deadline mindful of the negative impact that the ongoing saga could have for the island’s reputation. “It won’t be open-ended,” said Antoniou. “They may stay for a few weeks, go back and come again but there is a timeframe in this inquiry that we all want to keep to.”

Source: The Guardian