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Cyprus Loses Luster as Mediterranean Haven for Russian Business

Cyprus Loses Luster as Mediterranean Haven for Russian Business

For Russian businesses, Cyprus just isn’t what it used to be. New Cypriot anti-money laundering rules are compounding the effects of U.S. sanctions against Russia and its high-profile citizens, driving money away from the one-time haven.

“Russians are downsizing in Cyprus,” said Kyriakos Iordanou, general manager of the Institute of Certified Public Accountants of Cyprus, whose members have clients from the country.

The value of bank accounts at Cypriot lenders held by foreign nationals from outside the euro-area — mostly Russian — fell to 7.1 billion euros ($8.1 billion) at the end of November, according to the Central Bank of Cyprus. That’s down from a peak of 21.5 billion euros at the end of 2012.

En+ Group plc said Nov. 2 it plans to move to Russia from Jersey rather than to Cyprus as previously planned. En+ is the main shareholder of aluminum giant United Co. Rusal, a company of billionaire Oleg Deripaska, who is on the U.S.’s sanctions list. Accounts belonging to Viktor Vekselberg, who’s also on the U.S. list and whose Renova Group is the largest shareholder in Bank of Cyprus, have been frozen, according to the bank.