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In the Turkish-occupied northern Cyprus, an influx of Russian speakers, particularly from the former Soviet Union, has turned the area into a real estate hotspot. Construction activity is booming, fueled by an influx of Russian rubles and Iranian rials. The self-proclaimed republic has become a magnet for those seeking refuge from international sanctions, with penthouses, apartments, and studio flats selling rapidly.
According to a report in The Guardian, Iskele, once an unremarkable town, is now dubbed the 'new Limassol,' reminiscent of the coastal city to the south that attracted the first wave of oligarchs after the Soviet Union's fall. Boulevards are adorned with Cyrillic shop signs, luxury car dealerships, and cryptocurrency outlets, creating a bustling scene reminiscent of Moscow on the Mediterranean.
Reports suggest that the north, recognized only by Turkey, has become a haven for those seeking to evade sanctions and engage in potentially shady business activities. British High Commissioner Irfan Siddiq referred to the territory as a "black hole," expressing concerns about money laundering issues.
While the free area of Cyprus has implemented measures to clean up its financial industry, the northern region poses new challenges. Russians are settling in the north in large numbers, raising concerns about potential illicit financial activities. Rumors circulate about Greek Cypriot lawyers assisting Turkish Cypriot counterparts in managing portfolios of Russian clients.
Experts emphasize the need for structural reforms, including the creation of a sanctions office and a single money-laundering regulator, to prevent future scandals. The Cyprus government has promised a "zero-tolerance approach" to sanctions violations, receiving technical support from the UK to establish a sanctions implementation unit.
The absence of banking regulations and international norms in the north has facilitated the influx of Russian and Iranian funds. Arrivals at Ercan Airport have surged, and the number of Green Line crossings from the south has risen significantly. Language difficulties have emerged as a concern in schools, with a substantial percentage of students coming from Russia and Iran.
Despite promises to crack down on potential money laundering, insiders suggest a blind eye is turned due to the lucrative nature of building permits, transfer taxes, and kickbacks associated with property sales. The controversy over sales is likely to increase, given that many buildings are believed to be constructed illegally on land previously owned by displaced Greek Cypriots.
The trust system in the north allows investors, mainly Russians, to buy real estate in large quantities while maintaining anonymity, potentially facilitating money laundering. Turkish Cypriot authorities have pledged to address the issue, but insiders suggest that the allure of financial gains hampers strict enforcement.
[Information sourced from The Guardian]
