Accounts in Cyprus associated with Paul Manafort raised red flag
LIMASSOL, Cyprus — A bank in Cyprus investigated accounts associated with President Donald Trump's former campaign chairman, Paul Manafort, for possible money-laundering, two banking sources with direct knowledge of his businesses here told NBC News.
Manafort — whose ties to a Russian oligarch close to President Vladimir Putin are under scrutiny — was associated with at least 15 bank accounts and 10 companies on Cyprus, dating back to 2007, the sources said. At least one of those companies was used to receive millions of dollars from a billionaire Putin ally, according to court documents.
Banking sources said some transactions on Manafort-associated accounts raised sufficient concern to trigger an internal investigation at a Cypriot bank into potential money laundering activities. After questions were raised, Manafort closed the accounts, the banking sources said.
Offshore banking in Cyprus is not illegal, and the island has long been known as a hub for moving money in and out of Russia. Several U.S. lawmakers have raised questions about Manafort's business dealings in Cyprus.
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A spokesman for Manafort told NBC News in a statement that all the accounts were set up at the direction of clients in Cyprus, a common banking center for Russians and Ukrainians, "for a legitimate business purpose."
"All were legitimate entities and established for lawful ends," the statement said.
It added that Manafort "has no specific personal recollection" about the account closures, but understands that they were shut down just before a 2012 government takeover of the bank in the midst of a banking crisis.
Court documents and company registries reviewed by NBC News and interviews with banking sources indicate that Manafort's dealings in Cyprus began in 2007, when some of the accounts were opened and some companies were established.
One of the companies linked to Manafort, PEM Advisors Limited, was involved in a multimillion-dollar deal with Russian oligarch Oleg Deripaska, according to court documents filed in the Cayman Islands.
Deripaska — described in U.S. diplomatic cables from 2006 as "one of 2-3 oligarchs Putin turns to on a regular basis" — once was denied entry to the United States because of alleged organized crime ties, current and former officials have told NBC News.
He paid PEM $18.9 million to buy a television and media network in Ukraine, according to the Cayman Island court documents. But the deal fell through and the money was never accounted for, the documents say.
NBC News traced PEM and a number of other Manafort-linked companies to a law office in Nicosia, the largest city in Cyprus. Managing partner Kypros Chrysostomides, who is also Cyprus' former minister of justice, declined to answer questions without what he called his clients' "express consent."
Banking sources said that in October 2009, one of the 15 Manafort-associated bank accounts in Cyprus received a payment of a million dollars and left the account on the same day. Experts said the way the multiple accounts and companies were used suggests they were set up to deliberately make it difficult for auditors to track the movement of funds.
"There are some red flags here," said Tom Cardamome, managing director of Global Financial Integrity, a Washington-based non-profit.
"It looks suspicious and any bank that wanted to address money laundering would certainly have looked into the ownership of the company who owned these accounts."
The bulk of the accounts associated with Manafort were held at the Cyprus Popular Bank. In 2012, under an anti-money-laundering procedure called Know Your Customer, the bank asked for more information on the accounts' activities, according to two sources with direct knowledge of the request. Those sources said that Manafort chose to close the accounts instead.
Most of the assets of the Cyprus Popular Bank were taken over by the Bank of Cyprus in 2013. In a statement, Bank of Cyprus appeared to distance itself from Manafort.
"Bank of Cyprus has never had an extensive relationship with Mr. Manafort or any entities connected to him," the statement said.
It said that while most of Cyprus Popular Bank's assets were assumed by Bank of Cyprus in 2013, "these did not include any accounts or activities relating to Mr. Manafort either directly or indirectly."
Cyprus' attorney general, Costas Clerides, told NBC News that the Unit for Combating Money Laundering in Cyprus has handed information about Manafort's financial activities to U.S. Treasury investigators.
Several U.S. senators have raised questions about Manafort's financial relationship with Deripaska and his business links to Cyprus.
Last week, the Associated Press reported Manafort was on a $10 million-a-year consulting contract with Deripaska and promised him in a 2005 memo to influence politics and news coverage "to greatly benefit the Putin government."
"Mr. Manafort cannot confirm the authenticity of the memo cited by AP," the statement from Manafort's representatives said. "His representatives believe that Mr. Manafort complied with any applicable reporting laws and note that his relationship with Mr. Deripaska was described contemporaneously in press accounts."
In a paid advertisement in the Wall Street Journal on Tuesday, Deripaska disputed the AP report and threatened legal action.
"I want to resolutely deny this malicious assertion and lie," the ad said. "I have never made any commitments or contracts with the obligation or purpose to covertly promote or advance 'Putin's Government' interests anywhere in the world."
Manafort has repeatedly denied he ever worked for the Russian government.
He has agreed to appear before the House Intelligence Committee, which is running an inquiry into whether there were ties between Russia and Trump campaign officials and Russia's effort to influence the 2016 election.