Cyprus Investment Programme CIP Suspended
Citizenship by Investment Programmes support globalisation as a whole, including the tourism market, the construction industry and the general business sector in small EU jurisdictions by assisting wealthy foreign individuals to gain a European passport and travel throughout the European Union without a visa through means of investment. Apart from this, individuals will also be able to work and live freely in the EU and purchase property if required.
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Citizenship by Investment Programmes, also known as the “Golden Passports” or “Golden Visas”, assist with the promotion of small countries where otherwise, they may be overlooked by wealthy international investors.
The programmes are common throughout Europe and specifically among Mediterranean countries such as the Citizenship programmes in Malta, Cyprus and Turkey, and the Residency programmes in Spain, Greece, Malta, Turkey, Cyprus and Portugal.
Alternatively, they have also been called out to be controversial due to the possible exploitation of criteria involved. The European Commission and anti-corruption NGOs have regularly reprimanded this programme and raised concerns, stating the programme increases the risk of corrupt practices among European countries such as money laundering.
Cyprus Investment Programme
Cyprus joined the European Union as an EU member state in 2004, followed by inaugurating their first passport programme to foreign investors in 2007. This was implemented during the global financial crisis, where Cyprus needed to stabilise and protect its economy from losses. While the minimum investment has been at €2 million (in business, property or investment funds) since 2016, the programme initially began with a required minimum investment of €25 million. This significant decrease over the past few years had made the Cypriot passport ideal for international investors looking to obtain a European passport and with it, visa-free travel across the EU.
Suspension of the Cypriot Citizenship Programme
On the 13th of October, the Government of Cyprus officially announced the suspension of its Citizenship by Investment Programme, effective from the 1st of November 2020 indefinitely due to the recent investigation by Al Jazeera which exposed alleged corruption by state officials. No applications will be accepted after this date.
It has been said that high-profile politicians, lawyers and real estate developers were assisting convicted criminals to gain Cypriot passports, in particular a fabricated Chinese businessman/investor with a criminal record related to money laundering. The shocking video has caused distress and concern among the nation in Cyprus.
The Cyprus Papers Undercover: High-level officials reported to having assisted criminals to acquire Cypriot Citizenship
Released by Al Jazeera’s Investigative Unit, The Cyprus Papers Undercover is an undercover video where two Al Jazeera journalists posed as characters, Billy Lee and Angie, to reveal corruption in the CIP. The two reporters played the part of assistants representing a Chinese businessman and investor seeking a Cypriot passport to avoid his 7 year imprisonment in China for money laundering. All footage was captured on hidden cameras.
Any criminal activity is automatically a disqualifying factor for any individual applying for the passport programme, however throughout the video, it was revealed that individuals with criminal records, or ones not able to meet all criteria, are able to bribe their way into paying higher sums above the €2m requirement in order to bypass restrictions. The more they are able to pay, the easier it would be.
“Al Jazeera’s Investigative Unit exposes how a convicted criminal might obtain a European passport in Cyprus – for the right price.” - Al Jazeera English YouTube Channel
Multiple individuals involved in the video have denied any involvement or wrongdoing. They have filed complaint reports, along with claiming that they were suspicious of the journalists from the start and reported them to the anti-money laundering unit in the Government of Cyprus. One of the featured individuals is one of the highest-ranking officials in Cyprus: Syllouris. He has stated that he has withdrawn from his position starting 19th October 2020, until the investigation has been completed.
There have been claims that Al Jazeera have been specifically targeting Cyprus due to political motivations. Taking this into consideration, it is also important to note that this programme has gone under various changes over the years, improving its information, requirements and law compliance regularly.
At present, Cyprus has begun examining all previous cases that had been approved, while the European Commission is examining the Cypriot Citizenship by Investment programme and its compliance with EU law.
Furthermore, citizenship law is a national law - giving the right of each state to decide who can be a citizen of their own country.
Before The Cyprus Papers Undercover
In August 2020, the same broadcasting company, Al Jazeera, published ‘The Cyprus Papers’ - a collection of documents showing that multiple international applicants that had acquired a Cypriot passport between 2017 and 2019 were in fact wanted by Interpol, serving a prison sentence in their country of residence, under sanctions or criminal investigation. On the other hand, it was found that these same individuals had no criminal background at the time of acquiring their Cypriot citizenship.
In response to this release, Cyprus in turn defended the CIP and dismissed the reports claiming that further restrictions and laws were underway to protect and prevent the risks of criminals gaining access to the Cypriot passport.
Adversely, the programme’s criteria and rules were found to be flawed in certain areas during an audit held in September 2020. It was found that individuals with criminal backgrounds could still bypass certain aspects of the programme by help from their relatives’ citizenship applications.
Not the first time
This is not the first time that a Cypriot citizenship has been associated with corruption in the news. Just one year ago, a fugitive financier Low Taek Jho (also known as Jho Low) was involved in a scandal in Malaysia over money drawn from the 1Malaysia Development Bhd (1MDB) fund. It was reported that Low had his Cypriot citizenship approved in 2015.
The US Department of Justice stated Low had allegedly been involved in the money laundering of billions of dollars through the US financial system along with bribery. He is wanted in the US, Malaysia and Singapore - all in connection to the 1MDB scandal.
Low has stated he was not involved in any crime or malpractice to the criminal indictments against him.
In addition, Cyprus is not the first country to have suspended its programme. In the past few years, countries such as Moldova and Canada have also stopped their programmes due to unrelated factors such as low demand and political reasons, respectively.
End Note
Currently, business leaders in the Government of Cyprus are requesting the programme to resume after the investigation has been completed, to support the country’s economy.
The programme was put in motion to assist and support the international network and economy in Cyprus back in 2007, and the rules and criteria were created to be followed. However, questions remain:
Must the programme be abolished due to a number of corrupt individuals who misused the programme and went against the law?
Or can it resume as long as the rules are followed as intended?
Is the programme the problem, or is it the corrupt individuals?
And most of all: Why must a politician who went against the law influence the decisions of this government body deciding on its citizenship?
Even though the programme is currently suspended, it has significant support from Parliament, and we expect that the programme will re-open after another round of improvements and tightening of due diligence. Until there is a clearer way forward, Cypriot residency programmes might increase in popularity to continue attracting wealthy investors to the island of Cyprus in the meantime.