Russians massively withdraw their businesses from Cyprus

Major Russian companies are actively leaving the jurisdiction of Cyprus. Over ten organizations have initiated the transfer of assets to special administrative regions in Russia with a particular tax regime or to neighboring countries such as Kazakhstan, according to the Cypriot newspaper Phileleftheros.

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The newspaper reports a two-digit number of companies "with a huge volume of work in their sector" have expressed their desire to depart from Cyprus jurisdiction in recent months. The publication indicates that "other economic entities will do the same soon."

The newspaper attributes this trend to the policy of the Cypriot government, which opposes the circumvention of sanctions against Russia.

In particular, the Cypriot publication mentions the departure or plans to leave of TCS Group (the parent company of Tinkoff Bank), Etalon Group developer, Fix Price retailer, United Medical Group (the holding company of the European Medical Center), Transmashholding, Globaltrans, and Ozon marketplace.

Since the beginning of 2023, at least ten Russian companies have decided to leave Cyprus. In August, the largest Russian transport manufacturer, Transmashholding, and online retailer Ozon announced their exits. In November, the discount store Fix Price and the healthcare service provider United Medical Group also decided to relocate from Cyprus. The outflow of capital from Russia to Cyprus in previous years has been substantial. In 2021 alone, direct investments reached a record $46 billion. For Russian companies in Cyprus, the comfortable tax system made it a "home away from home".

The fight against sanctions evasion or circumvention enables Cyprus to strengthen its reputation as a trusted business and financial center, stated the country's president, Nicos Anastasiades, in December of the previous year.

In early December, the Cypriot government mandated banks to cease all operations with the Russian ruble. According to Politics, the U.S. was supposed to send a team of 24 individuals, including FBI and Financial Crimes Enforcement Network (FinCEN) personnel, to the island. They would participate in the consideration of 29 court cases related to the circumvention of sanctions against Russia.

In April, the largest bank in Cyprus, the Bank of Cyprus, and other local banks, including branches of the Greek Hellenic Bank and Alpha Bank, began closing accounts belonging to Russians. These restrictions were linked to banks' reluctance to fall under U.S. sanctions due to their dealings with Russian clients.