How Cyprus-Registered Funds Helped Russian Banker Hide Megayachts and Luxury Properties
Secretive Cyprus-Registered RAIFs Used to Evade Sanctions and Obscure Ownership of High-Value Assets Tied to Sanctioned Andrei Kostin
An investigation by the Organized Crime and Corruption Reporting Project (OCCRP) has uncovered how Cyprus-registered investment funds, known as Registered Alternative Investment Funds (RAIFs), were used to obscure the ownership of luxury assets tied to Russian banker Andrei Kostin.
The investigation reveals that Kostin, who has been sanctioned by the U.S. and European Union for his connections to Russian President Vladimir Putin, used these funds to hide his ownership of two megayachts and several luxury real estate properties.
The funds were managed by Inveqo Fund Management Ltd., a company owned by the wife of Cypriot lawyer Christodoulos Vassiliades, who has also been sanctioned by the U.S. for aiding Russian oligarchs. Inveqo marketed RAIFs as a way for clients to avoid revealing their ownership of assets, circumventing the European Union’s crackdown on corporate secrecy. In October 2021, just before Russia’s invasion of Ukraine, ownership of the two offshore companies that held Kostin’s yachts was transferred to RAIFs managed by Inveqo. This move effectively obscured the ownership of the megayachts, named Sea & Us and Sea Rhapsody.
The investigation details how RAIFs offered a minimal regulatory burden, requiring only registration with Cyprus’ securities regulator, rather than a full licensing process. This light regulatory touch made them attractive to high-net-worth individuals seeking to hide their assets. Moreover, the RAIF structure allowed the true owners to remain anonymous, with only the fund managers being listed in public registries.
In addition to the megayachts, three luxury properties linked to Kostin in Moscow and its surrounding regions were also transferred to RAIFs managed by Inveqo. These properties included a townhouse, a luxury apartment, and a share in a countryside resort worth $58 million.
Despite the efforts to shield the assets, Kostin’s involvement was exposed through U.S. indictments and investigations by OCCRP. The U.S. indictment accused Kostin of using a network of shell companies, trust structures, and investment funds to hide his assets. It also identified two of Kostin’s alleged co-conspirators, who helped manage his holdings through companies in Cyprus and Switzerland.
The investigation also underscores the challenges in enforcing sanctions, as RAIFs and similar financial structures can obscure the true ownership of high-value assets, allowing sanctioned individuals to evade scrutiny.
