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The recent Russia-Ukraine conflict has sparked the West to impose sanctions targeting the Russian elite. Vladimir Putin’s stronghold gives a free hand to oligarchs, politicians, and wealthy businessmen to make unaccountable amounts of money. Unless they stick their noses in political affairs, they are allowed to keep their money wherever they want.
However, the sanctions on Russia have begun to narrow down the safe havens for the Russian elite to hide their illicit gains. Even before the Russian evasion of Ukraine, these oligarchs have been hiding their funds in various countries throughout the world, like Switzerland, France, Italy, Germany, Spain, Monaco, the UAE, the UK and many more.
Where the Russians Stash their Assets
The Russians have used a variety of industries like real estate, art, luxury cars, and megayachts to invest their money and gain legitimate funds. Not only that, but they also hide behind shell companies, trusts, and LLPs so that their true identities are not revealed. According to the Atlantic Council, the Russian elites have a total of $250 billion stored in different regions across the world. Another research paper from the National Bureau of Economic Research states that 60% of Russia’s money is stashed in offshore safe-havens. Countries that have given these Russians a free hand to stash their illegally obtained funds are mostly in Europe and Asia, but the practice is common even in the US.
In the current situation, the world has its eyes set on the relationship between different safe havens and Russian oligarchs. Most countries have joined hands with the West in imposing financial sanctions on Putin’s allies. In their efforts to bring down the wealthy Russians, countries are identifying and freezing their megayachts and real estate. However, looking at the bigger picture, there is still a lack of transparency as there are political entities involved.
The UK and the European Union have been directing efforts to seize the assets of Russian oligarchs. One of the actions that recently made the headlines was the freezing of the assets belonging to Roman Abramovich, the (soon to be former) owner of Chelsea FC. In another similar case, a $580 million yacht belonging to Russian billionaire entrepreneur Andrey Melnichenko was seized in Italy. That’s not all, as business tycoon Alisher Usmanov’s $600 million superyacht was captured by the French police. Moreover, a former KGB agent and high-ranking general Sergei Chemezov had his $140 million yacht seized in Spain.
Although Turkey spoke against the Russian invasion of Ukraine, it has taken an ambiguous approach when it comes to sanctions on Russia. According to the active member of NATO, imposing sanctions on Russia can result in further damage to its already unpredictable economy. For this reason, Turkey has not even restricted Russian planes from entering its airspace. Turkey’s foreign minister said that they will welcome Russian oligarchs in Turkey for the purpose of investments and tourism on the condition that their yachts stay away from Turkey’s waters. Considering Turkey’s stance, western powers can urge the country to close down the boundaries for Russian businessmen.
The globally known financial hub, Dubai and the UAE’s capital, Abu Dhabi have always been safe havens for Russian oligarchs as they allow investments from all foreign sources without asking for the origins of their funds. Although the west has put pressure on the UAE due to its relaxed measures in the investment sector, the UAE remained silent. Even when the United Nations Security Council asked the UAE to condemn the Russian invasion of Ukraine, it remained silent and did not impose any sanctions. Considering this situation, it is safe to say that the UAE is on its way to becoming one of the world’s biggest safe havens for Russian oligarchs and corrupt politicians from all over the world. With UAE’s crypto firms getting requests to invest billions in virtual assets and investments in real estate also booming, the region is one of the favourite places of the Russian elite.
Just like the UAE, Maldives has also refused the call for sanctions and acts as a safe haven for wealthy Russian money launderers. A luxury yacht owned by Oleg Deripaska was recently seen at the coast of Mala, the capital of Maldives. Oleg Deripaska is the founder of the world’s second-biggest aluminium producer RUSAL. Apart from his yacht, there have been sightings of two more superyachts heading towards the Maldives right after the West threatened to free the assets of sanctioned Russian oligarchs.
Estonia is a country that has demonstrated efforts to counter money laundering and terrorist financing. However, the Danske Bank case significantly damaged the reputation of Estonia due to the biggest ever scandal in Europe. Between 2007 and 2016, the Estonia branch failed to stop a corruption case where €200 billion were laundered through the bank. Most of the funds originated from the accounts of Russian businessmen and oligarchs. The chief of the Estonian central bank recently addressed the Russian elite and informed them about its improved anti-money laundering measures. He said that the Russians should not try to launder money through Estonia. Moreover, Estonia is also making efforts to combat financial crimes in the cryptocurrency sector in order to steer clear of any scandal in the future.
When it comes to taking action against Russian oligarchs, Cyprus holds a position similar to Turkey and the UAE. This is demonstrated by the EU’s sanctions lists which never have less than five oligarchs that have ties to Cyprus. Recently, the country has initiated efforts to improve its measures against money launderers. Although the country has diplomatic and financial links with Russia and Ukraine, it has now said yes to cutting Russia off from SWIFT and has restricted Russian naval ships from accessing its ports for refueling.
What Shufti Pro Offers
With the eyes of global watchdogs on the Russian elite, there is an increased risk of money laundering and fraud in safe havens throughout the world. Banks, businesses, and investment firms need to prevent regulatory fines and reputational damages due to involvement with Russian sanctions evaders. To do so, financial institutions must incorporate identity verification measures to secure their business and onboard legitimate investors. Shufti Pro’s Know Your Customer solution seamlessly detects fraudulent entities and helps firms avoid getting sanctioned.
Shufti Pro’s investor verification service is the ideal solution for the investment industry that is struggling to comply with the new and upcoming sanctions to avoid losses. The AI-powered ID verification solution allows businesses to identify and verify the real identities of investors in less than a second with 98.67% accuracy.
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