Nearly $8 billion (£5.9 billion) in trade has flowed through British island territories since Russia’s full-scale invasion of Ukraine, according to a new report by Transparency International. The analysis, published on the fourth anniversary of the invasion, reveals a complex network of transactions involving luxury yachts linked to allies of Vladimir Putin, oil-drilling equipment, and coal sourced from occupied Ukraine, raising questions about the effectiveness of international sanctions.
The report, compiled by the Russian office of Transparency International even as operating in exile, highlights how companies are exploiting loopholes in the regulatory frameworks of the British Virgin Islands, Bermuda, the Cayman Islands, and Gibraltar to circumvent sanctions and maintain trade with Russia. The findings underscore the ongoing challenges in holding Moscow accountable for its actions in Ukraine and the potential for these territories to become conduits for illicit financial flows.
Researchers analyzed nearly 29,000 transactions, identifying a surge in activity immediately following the imposition of sanctions in 2022, with continued trade recorded up to January 2025. A significant portion of this trade, approximately $4.4 billion, was channeled through companies registered in the British Virgin Islands (BVI). The BVI has faced criticism from the UK for delays in implementing a publicly accessible register of corporate ownership, a measure intended to increase transparency and deter illicit activity.
The trade included 65 yacht transactions in 2022, increasing to 97 in 2023, many involving transfers between Turkey and the Russian port of Sochi. One vessel identified in the Cayman Islands trade data, the 74-meter Universe, valued at $100 million (£74 million), has been linked to Dmitry Medvedev, the deputy chair of Russia’s security council and former president, who is subject to UK sanctions. Another yacht, the Marlin, was reportedly purchased by oligarch Suleyman Kerimov, who is also on the UK sanctions list, and then gifted to a figure within Putin’s inner circle, according to a report by the independent Russian media outlet Proekt.
Sanctions Enforcement and Territorial Roles
Cayman Finance stated that UK sanctions laws are applied and “immediately enforced” on the island, and that over $9.7 billion (£7.2 billion) in Russian assets have been frozen through Operation Hektor, a joint effort with the UK government. UK Minister for Overseas Territories Stephen Doughty has described Operation Hektor as an “excellent example of best practice.” However, the Transparency International report suggests that despite these efforts, significant trade continues to flow through these territories.
Beyond yachts, the analysis revealed transactions involving drilling equipment destined for the Sakhalin-2 oil and gas pipeline, now majority-owned by Gazprom after Shell’s withdrawal in 2022. Bermuda entities were used to facilitate payments for this equipment. A $55 million Airbus aircraft sale, reportedly linked to the family of Chechen warlord Ramzan Kadyrov, was also processed through a Bermuda company. A spokesperson for Bermuda affirmed its commitment to complying with sanctions regulations but declined to comment on individual cases.
The report also uncovered coal shipments originating from territories occupied by Ukraine, reportedly linked to the family of former Ukrainian President Viktor Yanukovych, and routed through offshore accounts in the BVI. Transparency International noted that the BVI stands out among the overseas territories as a primary export destination for Russia, suggesting a deliberate effort by Russian companies to conceal trade income.
Concerns Over Transparency and Accountability
While the BVI maintains that the data does not indicate any sanctions breaches and has frozen over $400 million in Russian assets, the report raises concerns about the lack of transparency in corporate ownership. The UK has urged overseas territories, including the BVI and Bermuda, to establish fully accessible registers of beneficial ownership, but has faced criticism for reportedly conceding to the BVI government’s limitations on access to its new register.
Gibraltar, which established a register of beneficial ownership earlier than other territories, stated that transactions involving its companies accounted for less than 1% of the trade identified in the report. However, the overall findings suggest a systemic issue of sanctions circumvention facilitated by the opaque financial structures of these British territories.
Transparency International concluded that a “dysfunctional equilibrium” exists, allowing illicit financial flows, tax evasion, and sanctions circumvention to persist through firms registered in jurisdictions with limited accountability. The organization’s report adds to growing scrutiny of the role played by offshore financial centers in enabling Russia’s economic activity despite international sanctions.
The findings are likely to intensify pressure on the UK government to strengthen oversight of its overseas territories and ensure full compliance with sanctions regimes. Further investigation is expected into the specific transactions identified in the report and the entities involved, as international efforts to isolate Russia’s economy continue. The ongoing effectiveness of sanctions will depend on closing these loopholes and increasing transparency in global financial networks.
What comes next will likely involve increased scrutiny from the UK government and international bodies regarding the enforcement of sanctions within these territories. Continued monitoring of trade flows and a push for greater transparency in corporate ownership are crucial steps in preventing further circumvention of sanctions.
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