For the past eight months, the relevant authorities of the Republic of Cyprus have been aware of the case of potential sanctions evasion by the Russian oligarch Alexei Mordashov through Cyprus.
However, the ICIJ consortium and international journalistic revelations have beaten them all to it.
From late April to early May, MOKAS (and by extension, the Legal Service), the Ministry of Finance, and the Cyprus Police had been formally informed of the possible sanctions evasion by the Russian magnate through Cyprus.
Nevertheless, it appears there was a delay in investigating the matter.
If the investigative work had been completed earlier, it might have dispelled any negative impressions that remained regarding Cyprus from the recent revelations.
Information obtained by Phileleftheros indicates that due to a corporate transaction attempted through a financial services provider last spring, it became apparent that there were suspicions against a company connected to Alexei Mordashov.
According to leaked information, the financial services provider, as part of the due diligence process before the transaction (KYC-Know Your Client), discovered that a corporate entity involved in the agreement, which was to be concluded, had a corporate executive as its major shareholder, not an entrepreneur.
Furthermore, it was revealed that this corporate executive had become a major shareholder after a share capital transfer from Alexei Mordashov.
Because Alexei Mordashov had been included in the European Union sanctions list since February 28, 2022, and considering the substantial amount involved, suspicions arose that the share capital might have been transferred by Mordashov to the corporate executive of the company after sanctions were imposed.
The same sources indicate that between late April and early May 2023, information regarding the aforementioned case and the issues raised was conveyed to the Anti-Money Laundering Unit (MOKAS), which falls under the Legal Service, and the Advisory Committee on Economic Sanctions (SEOK) under the Ministry of Finance.
SEOK handles sanction-related matters and includes representatives from the Ministry of Foreign Affairs, the Ministry of Justice and Public Order, the Ministry of Energy, Commerce, and Industry, the Department of Registrar of Companies, the Central Bank of Cyprus (CBC), the Cyprus Securities and Exchange Commission (CySEC), and the Anti-Money Laundering Unit (MOKAS).
The same sources also report that the case was brought to the attention of the Cyprus Bar Association in early May and was promptly forwarded to the police for investigation, as there seemed to be potential criminal liability.
The Mordashov case came to light on Tuesday, November 14, by the International Consortium of Investigative Journalists, ICIJ.
The Russian oligarch was alleged to have transferred an investment amount of $1.4 billion to another person on the day sanctions were imposed, without clarifying whether there was any illegality.
The journalistic network had highlighted statements by a representative of the Cypriot Ministry of Finance, which had stated that the police were conducting a criminal investigation into the case.
The following day, the Director-General of the Ministry of Finance, George Pantelis, confirmed the police investigation and stated that it did not concern the department of a well-known audit firm in Cyprus.
In recent statements to RIK’s TV show “From Day to Day,” Christos Andreou, the Police Spokesperson, stated that the police investigations into the reported case will be completed soon, and the case file is expected to be forwarded to the Legal Service for guidance by early December.
It is worth noting that on Monday, a meeting was held at the Presidential Palace, attended by officials from the Office of the Attorney General and three ministers, under president Nikos Christodoulides.
The meeting focused on two aspects: improving the supervision of sanctions through the establishment of a Unified Supervisory Mechanism and enhancing the effectiveness of investigative work for such cases.
Regarding the first issue, however, there is currently disagreement. The Cyprus Bar Association does not wish to subject its members to an independent supervisory body.
