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The Cyprus Papers: helping Russian Oligarchs escape the law

The world’s most wealthy fugitives have found an innovative loophole to evade the long arm of the law: buying the citizenship of a tiny EU island nation- Cyprus.

The aforementioned loophole is its “citizenship-by-investment” scheme, which makes anyone investing at least €2 million in the country eligible for citizenship.

A trove of leaked documents released by Al Jazeera reveals that more than 2,544 individuals- many of them high-profile fugitives- were given a Cypriot Passport in 2013-2019, and thus, the European Union (EU) citizenship.

Almost half of the applicants were from Russia, while a quarter came from China. EU citizenship grants them the ability to live and work in twenty-seven European countries, all while escaping prosecution at home.

The Cyprus Papers offer a glimpse into the glitzy world of oligarchs. Some high-profile beneficiaries of the scheme include a former Member of the Russian Parliament- Vladim Moshkovich, an ex-Deputy Minister of Russia- Igor Reva, a former head of the Russian state-owned freight company- Vitaly Evdokimenko, the family of the current Deputy Prime Minster of Russia, and the richest woman in Asia- Yang Huiyan.

There are two primary factors driving the elite to look towards Cyprus and the EU. First, they fear their assets might be at risk in their home countries. In Russia and China, political purges to entrench the iron-fisted authority of the Presidents are common. Most take advantage of the range of protections from extradition that the EU offers its citizens.

Second, sanction-evasion. Western sanctions against Russia have made it increasingly difficult for Russian tycoons to transact with the mighty European financial ecosystem. A Cypriot passport allows them to do business across Europe, including at financial hubs such as Frankfurt and Milan. Analysis reveals that nine Russian billionaires- along with their families- use the EU passport to avoid being flagged as “high risk”.

Essentially, every application speaks of a story to either escape persecution at home or to exploit leniency abroad.

Foreign investment in Cyprus has created an entire economy around citizenship-buying. In fact, Russian language billboards advertising investment opportunities have cropped up all across the island. Most of the investment is pumped into the real estate sector with an increase in the number of Russian-owned villas, making Cyprus the new “Moscow on the Med”.

The Cyprus Papers also present a dark picture of how such citizenship-by-investment schemes can facilitate money laundering and weaken trust in the EU as well as its financial institutions. Since its inception in 2013, the EU has criticized Cyprus for this scheme, saying it opens up a back door for criminals to enter the EU. For instance, the VTB, also known as “Kremlin’s Bank”, is a sanctioned entity since 2014. Yet, Cyprus had no hesitation in selling its citizenship to three senior VTB executives: Victoria Vanurina, Vitaly Buzorevva and Alexsey Yakovitsky.

In response, Cyprus changed its rules in 2019 to better screen applicants for criminal backgrounds and sanctions. However, these changes were not applied in retrospect, and analysis by Al Jazeera’s Investigative Unit found that almost 60 people who were made Cypriot citizens before 2019 would be ineligible according to the rules that exist today.

The Cyprus Papers have exposed the glaring misuse of the citizenship-by-investment scheme by everyone from powerful oligarchs to desperate criminals. This has caused the European policymakers to review the scheme with great urgency. Some have even called for a total ban on EU Members selling their citizenship.

The European Union prides itself on upholding the rule of law, whereas certain Russian oligarchs boast of finding loopholes in it. Inaction by the former only emboldens the latter, and risks the use of this scheme in the future for something far worse, such as terror financing. It's high time the EU steps up to protect the sanctity of its institutions and the safety of its people.

Reporter- Shreyas Datar

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