The country’s Finance and Interior Ministers suggested stopping the issuance of Cyprus passports for investment. The decision was adopted on 13 October 2020 at an emergency government meeting. The reason was numerous procedural violations and abuses by officials.
Investors who have planned to participate in the Cyprus Citizenship Programme need to prepare documents urgently. Usually it takes at least 2 weeks to prepare the documents.
Many open questions remain in the current situation. It is not yet known what the Cypriot government will do about investors who have paid for their participation but have not had time to apply. It is also not clear what will happen with applications that will be under consideration after 1 November. We are waiting for clarification on these and other issues from the Programme Department.
Prerequisites and reasons for programme closure
At the end of August 2020, there was a major information leak about the programme. Journalists from the Al-Jazeera Television Company of Qatar have received reports on 1,400 investors who have received Cyprus passports for their contribution to the country’s economy.
According to journalists, the programme department accepted applications from investors with false information about their sources of income. The department also issued passports to persons who had a criminal record or were prosecuted for money laundering charges.
Cyprus conducted an internal investigation which resulted in the decision to revoke passports from 7 investors.
On 12 October, 1.5 months after the first publication, Al-Jazeera posted a video recording. On it, journalists from the television company impersonated representatives of a Chinese millionaire who was sentenced in absentia by the PRC authorities to 7 years in prison for corruption and money laundering. The conversation was recorded on a hidden camera.
The mediators promised to apply for citizenship, and in the event of problems 一, ask for help from AKEL member Christakis Giovanni. Dimitris Silluriz, Speaker of the Parliament of the Republic of Cyprus, appears in one of the episodes of the video recording. He asks journalists not to disclose the details of their conversation, as this could damage his reputation.
Dimitris Silluriz denies the validity of the charges against him. He notes that it was not just one but 18 Chinese investors. However, several parties have already called for Sillouris to be removed as head of parliament.
The Cyprus Anti Money Laundering and Terrorism Financing Authority (MOKAS) and the Cyprus Bar Association are to investigate the incident.
Prospects for the Cyprus programme
We expect the citizenship programme to be restarted with the new conditions. The main purpose of the changes will be to strengthen investor Due Diligence.
Правительство Кипра уже пересматривало инвестиционную программу гражданства в этом году. 18 августа 2020 года оно опубликовало поправки, которые в том числе касались процедур и документов для прохождения Due Diligence.
We discussed this in more detail in the material “Cyprus has published changes to the citizenship programme”.
A government representative, Kyriakos Kusios, said that Cyprus will only consider the terms of the new investment programme once a special commission has completed its investigation into the violations.
We anticipate that it will be difficult to restart the programme: Cyprus will have to negotiate the terms at all EU government levels. The harmonisation will last at least several months. Therefore, we should not expect the Cyprus citizenship programme to restart anytime soon.
Enhanced Due Diligence 一 global trend
We expect that the revision of the terms and conditions of the programme and the strengthening of Due Diligence will allow all parties to the process to avoid mistakes that were made in auditing investors in the past.
Before the latest amendments to the programme were adopted, department representatives checked the activities of their agents. They analysed customer files and inspected the pre-screening procedures for compliance with the programme rules.
We believe that agents should be the first to think about the quality of the preliminary inspection. They should be responsible for the quality of the documents that are submitted for participation in the programme.
The strengthening of Due Diligence is a pan-European trend. Therefore, we expect that in the near future the due diligence procedures will be strengthened in other programmes as well.
In our experience, it is very important that an investor has a good reputation and legal income. These criteria come in first place when participating in investment programmes.
How to obtain citizenship for investments in the European Union
We expect the Malta programme to be restarted with new conditions in the near future. The Programme Department is now in the final stages of processing applications under the current rules.
We have described the upcoming changes in more detail in the material “Restarting the Malta Citizenship Programme for Investment in September 2020”.
When Malta launches the updated programme, it will be the only state in the European Union that allows for citizenship for investment.