As the Republic of Cyprus is in the first month of its presidency of the Council of the European Union, the timing could scarcely be more sensitive. The island entered the role having spent more than a decade dismantling its reputation as a permissive financial hub and repositioning itself within the Western political, economic and security framework.
That shift — accelerated after Russia’s invasion of Ukraine — has brought international recognition, but also renewed scrutiny at a moment when visibility is unavoidable.
Two weeks ago, Cypriot media reported the death of a Russian diplomat named Aleksei Panov who was found in his office at the Russian embassy in Nicosia. Russian officials reported it as suicide while specialists claimed the 41-year-old was an officer of Russia’s military intelligence agency, the GRU.
Separately, and less than 24 hours after Cyprus took over the EU presidency, an eight-and-a-half-minute video was posted online purporting to show senior figures using their proximity to president Nikos Christodoulides to secure favours for would-be investors in return for cash.
One of the most serious allegations was the suggestion that senior figures might seek to obstruct EU sanctions against Russian oligarchs in exchange for corporate money.
The video triggered a political storm in Nicosia and two resignations: the president’s office director, Charalambos Charalambous, and the president’s wife, Philippa Karsera, who stepped down as chair of an independent charity. Both denied wrongdoing.
In turn, the government described the video as “malicious and the result of editing.”
Rejecting claims of foreign interference, opposition figures insist the central issue raised by the video concerns ethics and transparency rather than external intervention.
However, there is a broader political and geopolitical context in which these events are unfolding.
Since the 2013 financial crisis, Cyprus has undertaken sweeping reforms to reduce its reliance on banking and foreign capital flows, particularly from Russia, while strengthening compliance with EU and international sanctions regimes.
Following Russia’s invasion of Ukraine in February 2022, Cyprus adopted all EU restrictive measures, criminalising sanctions violations under domestic law and freezing hundreds of millions of euros.
Official data shows that approximately €901m in assets have been frozen by Cyprus investment firms and fund managers, with a further €307m frozen by administrative service providers.
The Central Bank of Cyprus has confirmed that more than 125,000 bank accounts have been closed in recent years and relationships with over 42,000 shell companies terminated, sharply reducing exposure to Russian and CIS deposits. Russian clients now represent 0.35 percent of the banking customer base, down from 2.7 percent in 2024.
International assessments have taken note.
The Strasbourg-based Council of Europe’s anti-money laundering body MONEYVAL has placed Cyprus in the top quartile globally for effectiveness in combating money laundering and terrorist financing. IMF analysis has credited Cyprus’s strict adherence to sanctions with halting new economic activity with Russia altogether.
The government has also pursued legal accountability for past abuses. Cyprus terminated its controversial citizenship-by-investment programme in 2020 and has since revoked 270 passports issued under the scheme.
Some 15 corruption prosecutions related to the programme were initiated in 2024, with further cases under investigation. Supervisory authorities have expanded enforcement powers, imposed multimillion-euro fines, revoked professional licences and strengthened oversight of legal, accounting and corporate service providers.
Cyprus has further established a National Sanctions Implementation Unit, developed in partnership with the United Kingdom. The unit seeks to strengthen the investigation and enforcement of financial and trade sanctions, particularly in relation to illicit Russian finance moving through Europe.
But these measures have not been cost-free.
Russian tourism has collapsed by more than 90 percent since 2019, inward investment from Russia has fallen sharply, and longstanding commercial ties have been unwound.
Cyprus has, in effect, chosen compliance over convenience.
In parallel, Cyprus has sought to rebalance its economy toward technology, innovation, higher education and renewable energy.
The country now ranks above the EU average on the European Innovation Scoreboard and has attracted a growing number of international technology firms and research institutions. Financial services remain an important component of the economy, but no longer dominate GDP.
This broader repositioning has been accompanied by an expanding geopolitical role. Cyprus has acted as a humanitarian evacuation hub during regional crises, facilitated maritime aid corridors, and deepened defence and security cooperation with western partners.
Against this backdrop, the renewed attention surrounding Cyprus comes at a pivotal moment — as the country assumes the EU presidency, having already absorbed the economic and reputational costs of reform.
There is no evidence that recent events are connected. There is, however, clear evidence that Cyprus has moved away from the practices that once defined its image.
For a small state navigating an increasingly contested geopolitical landscape, resilience is not rhetorical. It is structural.
Cyprus has chosen a path that is narrower, more demanding and more exposed to scrutiny – and it is one it appears prepared to continue walking.
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Andrea Busfield is an international bestselling author and journalist. Her books include Aphrodite’s War and Born Under a Million Shadows. She has held senior editorial roles across the British press and reported from conflict zones including Afghanistan, where she later worked as a civilian editor with NATO/ISAF. She lived in Cyprus between 2012 and 2024 and now resides in Ireland.
Andrea Busfield is an international bestselling author and journalist. Her books include Aphrodite’s War and Born Under a Million Shadows. She has held senior editorial roles across the British press and reported from conflict zones including Afghanistan, where she later worked as a civilian editor with NATO/ISAF. She lived in Cyprus between 2012 and 2024 and now resides in Ireland.