The Cyprus Cabinet of Ministers has approved a new tighter rules for the citizenship by investment program. The new regulations once approved by the house of representatives will give full powers to the government to terminate passports of 26 investors for ten years, who have been suspected of breaking the rules of investment scheme in Cyprus, Financial mirror reported today.
Cyprus was rocked by series of scandals over the media and has faced increased pressure from European commission for not properly doing the background checks on candidates threatening the reputation and integrity of the Cyprus citizenship by investment scheme. The denaturalization process of suspected investors previously stalled in legal vacuum.
Cyprus is pushing forward for these new reforms, after being hit by Coronavirus, slump in property sales and restore to the credibility of the scheme in a bid to make Cyprus a greater investment destination in Europe. The European commission predicted a decline of cyprus economy by -7.4% for spring 2020 due to pandemic.
Once the citizenship is revoked, any passports issued will also likely be rescinded including for family members.
The list of suspected investors include who violated the investment scheme rules are
- 9 Russians,
- 8 Cambodians,
- 5 Chinese nationals,
- 2 Kenyans,
- 1 Malaysian and
- 1 Iranian.
These investors also have right to appeal against the decision to revoke citizenship.
The regulations also strengthen Anti money laundering (AML) rules to scrutinize investors applying for citizenship program investing €2 million euros for acquiring Cypriot passport after six months.
In 2019, Cyprus introduced schengen visa requirement adding additional layer to its vetting process. Cyprus allocated EUR 1.4 million for due diligence checks every year through specialized due diligence firms. The European commission factual analysis report on investor citizenship schemes reported applicants must undergo compliance and background checks done by banks by opening a bank account in Cyprus before investing.
The investment scheme by naturalization by exception has annual quota of 700 cases yearly. Applicants must also pay additional EUR 150,000 towards research and housing development of Cyprus. All applicants should have made the necessary investments during the three years preceding the date of the application and must retain the said investments for a period of at least five years as from the date of the naturalization.
New regulations introduced in 2020, will be applied to the investment scheme
- AML/CFT rules to be further strengthened in line with EU rules
- All investors will be monitored for 10 years, including those were approved since 2012.
- Powers will be given to authorities to revoke passports, which is obtained by fraud or false representations or breaking laws of the state
- All service providers to be regulated by a body. Law firms by Bar Association, and accounting firms by the Institute of Certified Public Accountants.
- Real estate developers will be disqualified from serving as passport agents, since the developers are unregulated by anybody.
- Penalties will also be applicable for managers and firms handling due diligence procedures of prospective investors. Failure to comply will be subject to a fine of up to €350,000.
So far the Cyprus investment scheme has raised €7 billion euros mostly through real estate investments and 4000 investment passports have been issued under the citizenship by investment scheme, reported various international media.
Cyprus naturalized 3,198 individuals in 2018 of these 1,861 were non-EU nationals, according to Eurostat data. The EU-27 Member States granted citizenship to 672 000 persons in 2018 far less than the previous years, some 2.0 % of all foreign citizens in the EU.
