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EU Warns Cyprus Golden Visas Open to Money Laundering, Corruption

February 12, 2020

NICOSIA – Cyprus’ much-criticized scheme of selling Golden Visas and European Union passports to wealthy foreigners is open to corruption, money laundering and a conduit for criminals, the European Union’s MONEYVAL agency warned.

Cyprus, long fighting a reputation as a money haven for criminals wanting to avoid taxes and hide their income in the country’s banks, began selling the Golden Visas in 2013 and has granted more than 3,000 to rich foreigners, some of whom couldn’t find the country on a map, one Member of Parliament said in derision.

MONEYVAL is a committee of experts from the Council of Europe and said in a report that while Cyprus has taken some reforms after a Reuters report earlier said the visas had been sold to known criminals and others with dubious backgrounds that the risks are still high, especially in allowing investments in real estate to qualify for the program.

“These risks have not been properly mitigated,” it said. “The risks related to the Cyprus Investment Program have not been assessed comprehensively,” the news agency said in a report following up its own investigation by journalists.

There was no elaboration but real estate is broadly known to be used by money launderers as a stable investment which can appreciate over time, and is normally subject to more limited scrutiny, according to a European Parliament research note issued in 2019, the news agency said.

Under the program, a minimum 2-million euro ($2.18 million) investment can get a passport and instant visa-free travel throughout the European Union, of which Cyprus is a member.

Supervision of the real estate sector should be significantly enhanced, the MONEYVAL report said, saying there should be more preventive measures by real estate agents, noting that while Cyprus was co-operating with other countries it was “not very proactive” at freezing and confiscating foreign criminal proceeds.

The review was conducted in May 2019. Based on the results of its evaluation, MONEYVAL decided to apply an enhanced follow up procedure and invited Cyprus to report back in 2021.

The total amount invested under the investment scheme was 6.64 billion euros ($7.25) from 2013-18, the MONEYVAL report said, calling it “material” to the economy of Cyprus.

In November 2019 Cyprus said it would review the processes used to grant citizenships after a Reuters report that Cambodian nationals in the inner circle of long-time leader Hun Sen had acquired passports..

The government said it had introduced safeguards and moved to strip the visas of 26 people who got them but lawmakers told the news agency it has stalled due to some legal technicality, casting a further shadow over the government of President Nicos Anastasiades, who defended it.

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