Cyprus Government responds by strengthening the criteria of the Cyprus Investment Programme

Cyprus Government responds by strengthening the criteria of the Cyprus Investment Programme

On Wednesday, 6th November 2019, the Council of Ministers decided upon the actions that the Cyprus Government must take, in light of the fact that certain individuals obtained Cypriot citizenship in violation of the strict criteria to the Cyprus Investment Programme (http://www.reporter.com.cy/politics/article/586286/apofasise-tin-afairesi-26-chryson-diabatirion-to-ypoyrgko-symboylio).

The relevant Decision aims to rectify this, to minimise the risk of the above ever taking place again, as well as to restore the credibility of the Programme, by introducing stricter rules.

More specifically, the Council initiated the process of revocation of the Cypriot citizenship, of 26 individuals, who applied via the Cyprus Investment Programme, in accordance to the relevant legislations. From the 26 individuals, 5 are Chinese; 1 is Iranian; 1 is Malaysia; 2 are Kenyan; 9 are Russian; and 8 are Cambodian (https://www.sigmalive.com/news/local/596014/apo-poies-xores-katagontai-oi-26-pou-tous-anaklithikan-ta-diavatiria).

It also reaffirms the government’s willingness to adhere strictly to the criteria and conditions governing the Cyprus Investment Programme, in addition to the universal conduct of enhanced due diligence audits and, more generally, the entire implementation of the entire framework governing the Cyprus Investment Programme (http://www.philenews.com/oikonomia/kypros/article/814550/aposterisi-kypriakoy-diabatirioy-ga-26-atoma).

In connection with the above, there are now five stages of due diligence, compared to 2013, for the grant of Cypriot citizenship, including due diligence by the banks; due diligence by the service providers; International Government Information System; due diligence by three international firms; and most importantly, 11 exclusion criteria that were introduced in February 2019, for individuals who are considered Politically Exposed Persons (PEPs) and persons who are being investigated in other countries.

The Cyprus Government will further strengthen the criteria, by the establishment of a three-member committee, consisting of the General Accountant and the Chairman of the Public Resolution Authority, the Chairman of the Securities and Exchange Commission and the Legal Service Representative as members. Their task will be to review the findings of the new audits and report the findings (https://cyprus-mail.com/2019/11/06/cyprus-to-strip-26-citizenships-after-uproar-over-passports/).

The Decision authorises the Minister of Interior to continue audits of all persons who received Cypriot citizenship, via the Cyprus Investment Programme, until 2018. It also authorises the Ministry of Justice to immediately send the regulations defining the scope of application of the Cyprus investment Programme to the Legal Service, for legal review and, in turn, to submit them to the Parliament and the Council of Ministers for approval.

It also further cements the prohibition on advertising the Cyprus Investment Programme, in accordance with the provisions of the applicable Code of Conduct.

This recent Decision by the Council of Ministers, follows the article that was reported on Sunday, 3rd November 2019, that Malaysian fugitive financier, Jho Taek Low, received Cypriot citizenship, in September 2015, and obtained his Cypriot passport, via the Cyprus Investment Programme, within a few days after investing EUR 5 million property in the Famagusta district. Low promised Archbishop Chrysostomos to invest in church property, in Cyprus.

Low is also a key figure in the scandal of 1Malaysia Development Berhad (1MDB), which US and prosecutors say was to siphon out billions of dollars. (https://cyprus-mail.com/2019/11/03/malaysian-fugitive-financier-holds-cyprus-passport-report/).

It should also be mentioned that Reuters investigated the link between Cambodia and Cyprus, which shows that the family, the Chief Police and allies of Cambodia’s leader, Hun Sen, were granted Cypriot passports in 2016 and 2017, via the Cyprus Investment Programme (https://www.news.cyprus-property-buyers.com/2019/10/17/reuters-investigates-cambodia-cyprus-connection/id=00157287) (https://cyprus-mail.com/2019/10/23/cabinet-orders-probe-into-golden-passports-for-cambodian-elites/).

In light of the general discussions in Europe, about the misuse of the Citizenship Programme, in all Member States, the EU Commission indicated that it will prepare and issue a Report at the end of the year, and this could affect the future of the Cyprus Investment Programme.