A recent OCCRP investigation revealed that Cyprus-registered RAIFs were used to hide megayachts and real estate linked to sanctioned Russian banker Andrei Kostin. These secretive funds, managed by Inveqo, allowed clients to avoid disclosing their ownership, raising concerns about the effectiveness of sanctions and regulatory enforcement. The case highlights the challenges of ensuring transparency and preventing financial crime in the global investment landscape.
Key Points:
- Cyprus-registered alternative investment funds (RAIFs) were used to hide luxury assets, including two megayachts linked to Russian banker Andrei Kostin.
- The funds were managed by Inveqo, a company owned by the wife of Christodoulos Vassiliades, a sanctioned Cypriot lawyer.
- RAIFs were marketed as a way to bypass EU transparency rules requiring the disclosure of asset ownership.
- The use of RAIFs has raised concerns about their role in sanctions evasion and asset concealment.
Short Narrative:
A recent investigation by the OCCRP uncovered that secretive Cyprus-based Registered Alternative Investment Funds (RAIFs) were used to obscure the ownership of two megayachts and other luxury properties linked to Andrei Kostin, a Russian banker sanctioned by the U.S. and EU. Managed by Inveqo, a fund management firm owned by the wife of a sanctioned Cypriot lawyer, these funds allowed clients to hide their ownership of high-value assets. The megayachts were transferred into the funds just before Russia’s 2022 invasion of Ukraine, highlighting the role of RAIFs in evading sanctions and public scrutiny.
Compliance Insight:
The use of RAIFs as a tool to conceal ownership of assets highlights regulatory gaps that allow individuals under sanctions to shield their wealth. Regulators must increase oversight of fund structures like RAIFs, ensuring that beneficial ownership registries are enforced and transparency measures are upheld. The dissolution of Inveqo and its associated funds in 2023 raises questions about asset tracking and the effectiveness of sanctions enforcement in Cyprus and beyond.
Risk Analysis:
RAIFs present a significant risk to anti-money laundering (AML) and sanctions compliance efforts. The lack of public disclosure around the true owners of assets held in these funds complicates efforts to trace illicit financial flows. Financial institutions and compliance officers must remain vigilant in identifying entities that use RAIFs and similar structures to circumvent sanctions and hide wealth.
