GR US

Cypriot Audit Office Said Golden Visas No Bonanza, High Risks Hidden

Αssociated Press

A woman, right, wearing a face mask, walks outside of a shop at Makarios main shopping street in capital Nicosia, Cyprus, Friday, July 31, 2020. (AP Photo/Petros Karadjias)

Cyprus’ selling of so-called Golden Visas giving rich foreign investors residency permits and European Union passports hasn't been as profitable as said and opened the door for high-risk applicants who could be hiding the source of their wealth.

That was the finding of the Cyprus Audit Office over the program pushed hard by President Nicos Anastasiades' government despite warnings from the European Union as well that it's a conduit for potential money laundering, criminals and corrupt politicians to tuck away their money and get EU privileges.

The agency said the Parliament should act to amend the program because some visas have gone to investors family members who haven't contributed “a single euro” to the island's economy, The Associated Press reported.

The office said “thousands” of wealthy family members have been granted citizenship since 2013 when Anastasiades took office and as he continued to defend the program despite reports it sold residency to criminals and the corrupt, leading the government to withdraw at least 26.

Around 4,000 Cypriot passports have been issued to investors under the program, generating at least 7 billion euros ($8.16 billion,) the government eager for their cash despite the risks.

The Audit Office said three out of five cases that it examined raised “reasonable suspicions” that the true applicant was the investor’s spouse, “so that perhaps the investor who is a high-risk individual is not asked to explain the source of his wealth.” Two family members who were granted passports didn’t even meet eligibility criteria.

The report noted one applicant who was on an EU sanctions list and another who was under investigation by Interpol in his home country for financial crimes.

It said of the 635 applications still pending since May 2018, 91 should have been already rejected because officials have found evidence of possible money laundering, forgery, fraud, tax evasion or bribery.

Cyprus’ Investment Program has come under renewed scrutiny following new reports alleging that dozens of foreigners who each pledged up to 2.5 million euros ($2.9 million) to obtain citizenship had been accused of an assortment of crimes.

Earlier this summer, after insisting there were no problems in its Golden Visa program the government said it would strip seven more people who hadn't met criteria aimed at vetting those ineligible.

That came after a report by Al Jazeera's Investigative Unit that the government had sold them to criminals, fugitives and the corrupt, that coming after an earlier Reuters report finding the program was being used by wrongdoers.

The Reuters report led to 26 people seeing their permits and passports revoked with the government at that time also saying there was no indication the scheme was being used by criminals or to hide money.

Cyprus’ Golden Visa scheme offers citizenship in exchange for an investment of  2 million euros ($2.37 million,) including the purchase of a residence worth at least 500,000 euros ($591,932.50, in addition to another 150,000 euros ($177,579.75.)

DEFENDING THE SALES

Anastasiades told the Agence France-Presse news agency  a special committee had previously started an investigation into 30 people who bought those passports to see if there were "any violations of our criteria,” at the same time he said there weren't any serious problems.

"It seems that seven out of the 30, they should be deprived of the Cyprus citizenship," Anastasiades said without revealing their identity, the government refusing to let people know who's buying their country's passports.

Al Jazeera said it was unclear whether Cyprus was only now looking into the passports of those named by the site or claiming it had already begun before the report the site said proved wrongdoing was going on.

In late 2019, the Cypriot government said 30 people were under investigation and faced being stripped of their citizenship.

The names of nine investors and 16 relatives were revealed in news reports - the remaining five were not named - but none of those names is among those published in The Cyprus Papers as Al Jazeera called its report.

In May 2020, Cyprus's Interior Ministry told Al Jazeera it had "initiated deprivation procedures" for 11 investors and their relatives, meaning the announcement of only seven individuals to be stripped of their passports suggests the government is taking less action than it originally promised.

It is also uncertain if any of those named in The Cyprus Papers are among the handful to lose their "golden passports" or if they are people related to earlier news reports.

In the interview with AFP Anastasiades defended the program that has been a major source of income for the Mediterranean country, bringing in 7 billion euros ($8.29 billion) from 7,000 investors.

While commitments were made in late 2019 to revoke passports of those linked to criminal activity, it was only in July this year that the Parliament passed a law that allows citizenship to be stripped retroactively, said Al Jazeera.

A separate probe by the Cyprus Security and Exchange Commission recommended this month that authorities revoke citizenship from seven individuals who submitted forged documents in their application.

The Cyprus government has conceded that “mistakes” were made and has beefed up eligibility criteria in recent years. 

The most recent changes that lawmakers approved last month include new anti-money laundering vetting rules and making it easier to revoke the citizenship of investors involved in or convicted of a serious crime.

An independent committee has been set up to probe thousands of applications that were made since 2007. The investment program had gathered pace after 2013, when a financial crisis nearly brought Cyprus to bankruptcy.

Cyprus’ Interior Ministry criticized the Audit Office of overstepping it’s purview with a “fragmentary” report that covers only a limited time frame. 

It said in a statement that it would wait for the findings of the independent committee, which will decide whether all the rules were applied and eligibility criteria met at each phase of the program.

(Material from the Associated Press was used in this report)