Western sanctions are hammering the “Russian Firewall” in Cyprus, with companies fleeing the Mediterranean island in droves for friendlier shores. This mass exodus, first reported by Kommersant on January 16, marks a significant shift in the geopolitical landscape. The island in the eastern Mediterranean Sea , once a favored financial hub for Russian entities, is now witnessing a major departure due to the tightening grip of sanctions.
Russian companies are leaving Cyprus because of the effects of Western sanctions. The sanctions are making it harder for Russian companies to do business, according to a big story in the state-controlled Russian news source Kommersant on January 16.
A news source called Kommersant says that many Russian companies have decided to move either back to Russia or to countries like Kazakhstan and the United Arab Emirates that are known to be friendly to Russian businesses.
In November 2023, a huge leak of financial documents from Cyprus’s financial service providers was made public. These documents were widely called “Cyprus Confidential.” When the International Consortium of Investigative Journalists (ICIJ) looked into it further, they found that banking services in Cyprus actively helped Russian oligarchs and Putin family members avoid sanctions.
President Nikos Christodoulides of Cyprus acted quickly in response to these reports. He asked financial crime experts to help with investigations that were aimed at finding ways to get around sanctions. There should be “absolutely no shadows” over Cyprus, he said, because any shadows could make it harder for the country to get “quality” foreign investment.
Cyprus’ actions against Russian money may be working, according to new claims.
Russian companies and oligarchs in Cyprus were getting more attention from the FBI, according to the Moscow Times in December. At least 10 large Russian companies that were doing business on the island left because of the extra attention. It’s still not clear what the FBI’s investigations have to do with the earlier ICIJ story.
A lot of Russian investments came to Cyprus, which has a history of being a major hub for Russian money transfers in Europe. A shocking 40% of the country’s overall deposits came from Russians in 2013, according to the AP. The island nation kept getting money from Russia and Belarus even after the full-scale attack was stopped by Western sanctions.
Russian immigration has effects beyond the economy. Since the full-scale attack, there have been a lot more Russians moving to Cyprus and the Turkish-occupied northern part of the country. According to a story in September by the Guardian, almost 40,000 Russians moved to Northern Cyprus just in 2023. This added to the state’s changing population of 382,000 people.
As Cyprus deals with the problems and chances that come with Russian companies leaving, these events show how complicated the relations between countries around the world, the way money works, and the effects these changes have on society are.