Russian oligarchs forced to leave offshore havens Tuesday, December 11, 2018 3:00:27 PM

With three months of sanctions, the Donald Trump Administration has managed to do something which the Russian government has been unable to do for the last 27 years: stop Russian money from flowing into offshore accounts. finanz.ru reports.

Since the tightening of sanctions in April, which was accompanied by a mass audit of Russians’ accounts in Cyprus, the freezing of Oleg Deripaska’s and Viktor Vekselberg’s assets, and the elimination of the Baltic “laundromat” for laundering Russian money, wealthy Russians have been having trouble getting their capital out.

The overwhelming majority of offshore jurisdictions that had been popular among Russians stopped accepting Russian money in the second quarter, Russia’s Central Bank reported in its quarterly report on direct investments from abroad.

The most serious difficulties have emerged in Cyprus, a major Russian “piggy bank”. Between April and June, Russians withdrew $13 billion from the island, setting a four-year record.

The outflow of capital began when a delegation from the US Office of Foreign Assets Control – the department responsible for the coordination and practical implementation of sanctions – visited Cyprus.

After meeting with the leadership of the Cypriot Central Bank, other banks on the island started asking Russians for documents which had not previously been required – proof of the source of income, letters from employers, proof of paid taxes for the last two years, bank statements for the last year, documents for real estate, and documents proving business ownership, with a description of the nature of the business.

Direct investments by Russians in Cyprus have dropped from $179 billion to $166 billion. However, this figure remains a formidable 10% of Russia’s GDP.

At the same time, more than 10% of the withdrawn funds had to be brought back from the Virgin Islands: at the end of the first quarter, Russians were storing $43.5 billion there, but by the end of the second, only $38.3 billion remained.

Direct investments in Austria also fell from $31.3 to $29.7 billion, from $49.5 to $48.3 billion in the Netherlands, and from $18.7 to $17.5 billion in Switzerland.

The outflow of Russian money into Bermuda, Jersey Island, Monaco and Latvia has also come to a halt. For a long time, Latvia was used as a relay point for getting Russian capital into the EU.

Attempts to hide in Hong Kong have also failed: in the first quarter, Russians withdrew nearly $1 billion there, increasing their investments by a factor of 6. However, all these investments had to be liquidated in the second quarter, and the total amount dropped from $1.33 billion to $269 billion.

Only the Bahamas have seen a net influx of Russian money, with $600 million withdrawn there in the quarter.

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