EU Lawmakers Cite Cyprus Golden Visa Money Laundering Haven

(AP Photo/Petros Karadjias, AP)

Cyprus – where the government has been criticized for selling Golden Visas that come with residency permits and European Union passports – was one of seven countries cited by the European Parliament for not vetting applicants closely enough to curb money laundering.

The lawmakers, without enforcement abilities, produced a report only urging the countries, including Luxembourg, Ireland, Malta, Hungary, Belgium and The Netherlands to get tougher on who gets the visas and to scrutinize the source of their investments.

Cyprus’ much-criticized Golden Visa scheme allowing rich foreigners to get residency permits and European Union passports is opening the door for Russian oligarchs and for organized crime to infiltrate the country and bloc, EU officials earlier warned.

Even some established Russian businessmen on the island are concerned, worrying that the new oligarchs do not live in Cyprus and the properties that they are purchasing will become a ghost town, Al Jazeera reported.

The European Commission is squeezing Cyprus over the visas that were defended by President Nicos Anastasiades as it’s bringing riches into the country despite complaints the investors aren’t being property vetted for ties to crime or money laundering, with the news agency reporting that the marina in Limassol is rapidly filling with luxury yachts.

Cyprus doesn’t require purchasers to even step foot in the country, a worrying aspect as other countries regulations insist the investors show a presence.

Bulgaria, Cyprus and Malta offer passports to investors without any real connections to the countries by paying between 800,000 and 2 million euros ($909,000 to $2.3 million) with the visas likely helping organized crime groups infiltrate the EU and launder money.

The parliament’s Committee on Financial Crime and Tax Evasion took to investigate the growing use of the visas that allow wealthy foreigners to buy property or government bonds and securities to be eligible.

Lawmakers said EU states should “phase out” as soon as possible all existing schemes to market citizenship and residency permits to wealthy foreigners. Currently 20 of the 28 EU states run these programs, the news agency Reuters said in a report.

The economic advantages of these schemes “do not offset the serious security, money laundering and tax evasion risks they present,” the resolution said, echoing a report from the European Commission in January.

The industry’s trade association, the Investment Migration Council, said that ending the programs would threaten vital investments in “peripheral economies,” although it got so bad in Bulgaria that top officials were accused of demanding bribes in return for visas and passports and selling them to practically anyone who had the money, enriching themselves.

Lawmakers upheld the Commission’s warnings on risks posed mostly by programs run by Cyprus and Malta, where an investigative journalist probing corruption at the highest level of government was murdered and no ringleader yet found.

DIRTY MONEY

“A good first step to combat intra-EU money laundering would be to get rid of the so-called ‘golden visa’ which are a gateway for money laundering and organized crime,” Markus Ferber, head of the conservative group on the committee told the news agency.

In the report, lawmakers also urged the creation of an EU-wide financial police to counter the laundering of proceeds from criminal activities, which they estimated amount to 110 billion euros ($124.19 billion) annually in the EU.

They called for stricter rules and supervision after a series of scandals, led by Denmark’s biggest financial institution, Danske Bank, at the center of a $230 billion money laundering scheme through an Estonian branch, which also touched Deutsche Bank and Swedbank.

The report further urged the EU Commission to assess money- laundering risks posed by legal arrangements such as special purpose vehicles and non-charitable purpose trusts, especially in Britain and its crown dependencies and overseas territories.

The lawmakers said there was a need for tougher EU rules against tax evasion and tax avoidance, saying the bloc should counter these practices in foreign tax havens and also in the seven EU states that “facilitate aggressive tax planning.”

The EU’s response has been tepid despite calls for stronger cross-border collaboration in the face of scandals showing most of the dirty money was coming from Russia and filtered through big banks to Baltic countries that used to be part of the former Soviet Union.