Russian oligarchs take money out of Europe to Russia and 'friendly' countries
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Russian billionaires have withdrawn assets worth tens of billions of dollars from Europe to Russia and its so-called friendly countries—meaning those that have not joined the sanctions against Moscow—after the full-scale invasion of Ukraine, Bloomberg reports.

Last month, shareholders of United Medical Group CY Plc and MD Medical Group Investments Plc, controlled by tycoons Igor Shilov and Mark Kurtser, approved the companies’ move from Cyprus to Russia.

That transfer will help push the total value of assets transferred by the wealthiest Russians since February 2022 to at least USD 50 billion, according to Bloomberg.

The new trend is breaking with a long-standing practice by Russian billionaires to hold their assets in Europe, taking advantage of investor-friendly legal systems, the chance to get dividends in foreign currencies and low taxes.

"Now, Russia’s richest are left with a dwindling number of places to put their wealth, as many of them are under US, UK or European sanctions," per Bloomberg.

"Right now, Russia seems less of an evil than overseas," Natalia Kuznetsova, partner at Business Solutions and Technologies, which formerly operated in Russia under the Deloitte brand, told the agency.

The transfer of assets registered in locations including Cyprus, Jersey and Switzerland to Russia and nations the Kremlin considers friendly, such as the United Arab Emirates and Kazakhstan, started soon after the Russian full-scale invasion.

Among the first moves were the family holdings of billionaire Andrey Guryev and steel tycoon Victor Rashnikov from Switzerland and Cyprus to Russia. Others, like billionaire Igor Altushkin, followed later.

The Kremlin has put pressure on the wealthiest Russians to repatriate their assets from the countries it calls "not friendly." Dual tax treaties have been suspended, making it impractical to stay registered in places like Europe. Russia makes it hard for companies to pay dividends or sell assets to the entities registered in such jurisdictions.

"The Russia-Cyprus link doesn’t work very well now in terms of money transfers," said Alexei Kuznetsov, partner at B1, which formerly operated in Russia under the Ernst & Young brand. "This is solved by moving to a friendly jurisdiction or Russia."

In August, Mr Putin instructed the government to create a mechanism that will allow Russia to regain control over Russian companies, where such control is exercised through foreign entities and was lost as a result of sanctions.

To lure the tycoons home, the Kremlin has used incentives such as the local low-tax domestic ‘offshore’ zones it introduced in 2018 and constantly fine-tunes. Russia also raised the cost of keeping assets in traditional havens like Cyprus or Malta, while holdings with international assets that re-registered in Russia can qualify for tax benefits.

According to Bloomberg, not only billionaires are shifting their holdings—other Russians are also moving their assets home. As many as 115 companies moved to domestic ‘offshore’ zones this year making it an overall total of 254, Russian first deputy economy minister Ilya Torosov said earlier this week.

Billionaires who are not under sanctions are also looking for new homes for their European holdings and favour jurisdictions the Kremlin deems to be friendly.

For instance, steel magnate Vladimir Lisin and transportation holding Globaltrans Investment Plc have moved to Abu Dhabi from Cyprus, while Russia’s second biggest gold miner Polymetal International Plc re-registered in Kazakhstan last month. The company is not under sanctions, but its Russian unit was placed on the American list this year.