Background
We remind that Cyprus has launched a so-called investment citizenship program, according to which a person may obtain a passport of this country by investing a certain amount of funds in assets on its territory. In the nearly seven years since the start of the scheme, the Cypriot government has approved about 4,000 applications for citizenship.
Scandal
It all started with the publication by the international media group Reuters the number of officials from Cambodia who received "golden citizenship", including, for example, the heads of the police and ministry of finance.
In turn, Cyprus stated that it has begun the process of depriving 26 citizens of the citizenship that they received in accordance with the above scheme, recognising that it has flaws. The data of persons deprived of citizenship was not disclosed, however, it was stated that this also applies to those whose names are mentioned in Reuters messages. Cypriot sources told the media that the group included nine Russians, eight Cambodians, five Chinese citizens, two Kenyans, one Malaysian and one Iranian.
Toughening
It is also worth noting that earlier the EU Commission ordered EU states to tighten the inspection of citizens of non-EU countries who obtain the so-called "golden passports" through investment.
The Commission plans to introduce more rigorous monitoring of these schemes. In their opinion, such schemes may be used for tax evasion and money laundering, and EU citizenship gives individual free movement in most of the EU, easy access to a single market and other rights that can be used in a negative way.
The Commission stated that there are several problem areas in such schemes:
- Security: applicants' checks are not reliable enough, and the EU’s own centralised information systems, such as the Schengen Information System (SIS), are not used systematically enough;
- Money laundering: additional checks - the so-called KYC procedure - are necessary to ensure that EU rules on combating money laundering work;
- Tax evasion: monitoring and reporting are necessary so that people do not use such schemes to obtain tax advantages; and
- Transparency and information: there is no clear information on how the schemes work, including the number of applications received, satisfied or rejected and the origin of the applicants; EU states do not inform each other about candidates.
Cyprus, Malta and Bulgaria issue passports to citizens of non-EU countries who make sufficient investments in these countries. Wealthy foreigners may "buy" passports there for approximately1 to 2 million euros. They and 17 other EU member states, including the United Kingdom, also grant residence rights to investors. This right gives a person the right to citizenship. The scale of investments required to obtain a residence ranges from about 13,500 euros in Croatia to more than 5 million euros in Luxembourg and Slovakia.
