OCCRP Break Story About Kremlin’s Connections To Cypriot Bank

Here’s the introduction to yet another tangled tentacle of the Kremlin’s financial connections….

RCB Bank was set up and owned by a Russian bank dubbed Putin’s “piggy bank.” Despite making moves to obscure its Russian ties following the invasion of Ukraine, current and former RCB executives have ties to the Kremlin and acquired Cypriot passports under dubious circumstances.

Key Findings

  • Russian VTB bank got rid of its shares in Cyprus-based RCB in February, but experts said this did not necessarily mean an end to the ties between RCB and the Kremlin.
  • RCB announced in March it would voluntarily cease banking operations, but a banker said European regulators pressured it to stop banking following Russia’s invasion of Ukraine.
  • Two opaque Cypriot companies that now own RCB both have ties to RCB officials.
  • A leaked Cypriot government report says RCB helped its CEO, Kirill Zimarin, and 31 other staff, their relatives, or bank clients to obtain Cypriot passports under a citizenship-by-investment scheme that was later shown to be corrupt and shut down.
  • The report indicates RCB used political influence to push through problematic passport applications, and that many applications associated with the bank did not meet the requirements for Cypriot citizenship.

On March 24, Cyprus’s fourth-largest bank announced it would wind down its banking operations in the wake of the “volatile geopolitical situation” caused by Russia’s invasion of Ukraine a month earlier.

The bank, RCB, had spent years refining an image of itself as a thoroughly European bank, even adopting a logo that mimicked the flag of the European Union and changing its original name, Russian Commercial Bank (Cyprus) Limited, to RCB Bank Ltd. But until the day Russia invaded Ukraine in February, RCB was nearly half-owned by Russia’s VTB Bank, which is closely linked to Vladimir Putin’s government.

Now, Cypriot corporate records and a leaked government document obtained by OCCRP reveal the full extent of RCB’s attempts to disguise its legal ownership and Russian executives as Cypriot. Those attempts became urgent as wide-ranging EU and U.S. sanctions loomed after Russian troops entered Ukraine.

On February 24, RCB announced that VTB’s 46.29-percent stake would be bought by two opaque Cypriot companies that already owned shares in the bank. The move was supposed to distance RCB from Russia, but in fact it was little more than a management buyout.

Although Crendaro Investments Limited, the company that bought most of VTB’s shares, was registered in Cyprus, it is co-owned by the bank’s Russian CEO, Kirill Zimarin, a former VTB manager with ties to the chair of VTB’s management board.

Zimarin, too, is ostensibly Cypriot. He and 31 other RCB staff members and their relatives, as well as some bank clients, obtained passports from the island nation between 2008 and 2019, according to a leaked Cypriot government report obtained by OCCRP. The report, which looked into abuses of the country’s now-defunct citizenship-by-investment scheme, reveals how RCB allegedly helped them do it by hiring a well-connected former Cypriot official who lobbied on their behalf.

They were among 6,700 foreign citizens, including 2,869 Russians, who obtained so-called “golden passports” from Cyprus through the island’s citizenship-by-investment scheme, which allowed foreigners to effectively purchase passports by investing or depositing large sums of money in Cyprus.

When RCB changed its name from Russian Commercial Bank, it said the move was a “logical step” that reflected its “international positioning” and its operations in Cyprus.

But regulators at the European Central Bank have long been concerned about RCB’s links to the Kremlin, according to a European banker familiar with supervisory matters. Even after VTB divested from RCB in February, the Central Bank “thought that because of the bank’s links to VTB and the political situation, it couldn’t continue operating as a viable banking unit,” said the banker, who spoke on condition of anonymity while discussing confidential banking issues.

“It is highly unusual for a profitable bank with hundreds of employees to withdraw from banking and give up its banking license so suddenly,” said James Henry, an economist and longtime investigative journalist focusing on banking. “It’s a clear indication that bank regulators, probably at the [European Central Bank], were concerned that VTB’s role in RCB had been tolerated for too long.”

In its response to OCCRP, RCB strongly rejected “allegations that it has played or is playing any role in any political process” and added that “[t]he only expression of our position throughout the life of RCB has been its absolute rejection of the war and our demand for an immediate end of it.”

From the Kremlin to the Mediterranean

VTB is a Russian state-owned bank that was dubbed Putin’s “piggy bank” after revelations in 2016 from the Panama Papers, a massive leak of corporate records via the International Consortium of Investigative Journalists, showing Putin’s allies had used Russian Commercial Bank (Cyprus) to move huge sums of money offshore.

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