Stop the Untouchables. Justice for Sergei Magnitsky.

Magnitsky Investigation Expands to Cyprus

Nuclear Diner

The government of Cyprus opened an investigation last month into whether stolen Russian tax money was laundered through its banks. It has done so with reluctance after Magnitsky’s former employer Hermitage Capital Management submitted paperwork in July 2012 showing that $31 million of this stolen money was moved out of Russia using five Cypriot banks: Alpha Bank, Cyprus Popular Bank, FBME Bank, Privatbank International and Komercbanka. It also pointed a finger to Dimitry Klyuev as the alleged ringleader in the corruption case who owns a Cyprus-based firm called Fungamico, and who was in Cyprus with his associates at the time the money went missing. Cyprus government officials delayed starting an investigation telling Hermitage Capital representatives that they first must consult with Russian officials to determine if money was really stolen before they could start an investigation.

The timing of Cyprus’ Magnitsky probe is terrible for a country that relies heavily on its Russian clients and their large amounts of money deposited in its banks, but that also is waiting on a €17 billion ($22.4 billion) bailout from the European Union (EU) and the International Monetary Fund. If the Cypriot government finds its own evidence that its banks laundered stolen Russian currency, there could be a push from the the rest of the EU for further investigations of all of its Russian banking clients. Der Spiegel reports through a German intelligence (BND) source that Cyprus banks could hold $26 billion in its Russian client accounts. Approximately 50,000 Russians live in Cyprus.