Cyprus Mail

Stricter controls on agents selling investor passports

The government is in the process of revising its citizenship-through-investment scheme, following complaints voiced by European politicians and negative press coverage abroad.

It’s understood the tweaks will mainly involve imposing stricter controls on intermediaries, who receive a handsome commission. These are either real estate agents or lawyers.

A register of agents certified to promote the scheme is to be created, with the members required to abide by a code of ethics, a government source speaking on condition of anonymity told the Cyprus Mail.

“For example, it’s come to our attention that certain agents advertise the scheme abroad in countries which do not even allow dual citizenship. This is one thing that we will be cracking down on,” he said.

Asked whether the revisions are being made for the appearance’s sake or because of genuine abuses, the source said: “A bit of both.”

Restrictions to advertising will also apply online, the source said, but did not elaborate.

It’s been reported that some of these agents are touting their services on Facebook.

Overall, however, the system is robust, as applicants are thoroughly vetted with the assistance of domestic and international agencies – such as Interpol – to ensure that they are not a security risk to Cyprus or the EU. Any applicants with criminal records are automatically rejected.

Additionally, applicants are required to account for the provenance of the money they aim to invest.

According to the same source, the finance ministry is mulling how to roll out the updated scheme with the additional restrictions – whether it will be via legislation or otherwise.

“There should be something tangible in about two weeks’ time,” he said.

The issue regained traction after the Guardian ran a story last week criticising the government for granting citizenship to billionaire Russian oligarchs and members of the Ukrainian elite.

Trailing the Guardian report, a European Commission spokesman said that conditions for obtaining citizenship are set by national law but ‘are subject to due respect of EU law’.

The Commission said that since 2014 it has been pursuing a dialogue with the Cypriot authorities to ensure that a genuine link exists between the country and the investors applying for naturalisation – in short, to make certain that Cyprus isn’t giving away citizenship to anyone who can afford it.

The matter was also raised this week by troika officials, currently on the island for a post-memorandum review of the economy, the Mail is told.

But the government source said the concerns are largely unfounded.

So far, most applicants to Cyprus’ citizenship scheme have been from Russia, China and the Middle East, including Gulf Arab countries.

Asked if the lion’s share of citizenships went to Russian nationals – which might explain the EU’s objections – the source commented: “There is nothing that’s over the top in terms of distribution, nothing eye-popping.”

Cypriot officials argue that the investment-for-passport scheme here is in fact stricter than elsewhere.

The investment needed for citizenship in Cyprus is for €2 million if the investment is made solely in residential real estate, at least a quarter of which must be spent on a residence for life. If not, the threshold is €2.5 million, at least €500,000 of which must be spent on a permanent residence.

In both cases, the requirement of a permanent residence ensures the investor remains closely engaged with Cyprus even if not actually obliged to live on the island.

The initial requirement for a €2 million overall investment in real estate applies for three years, after which the naturalised person may divest of the investment. However, they must keep their residence in Cyprus for life.

By comparison, under Malta’s scheme, €350,000 must be spent on a residence, and it need only be held for five years.

Since 2013, when the current scheme was introduced, some 1,300 persons have been naturalised through it.

The citizenship programme brought in €3.3 billion in foreign investment by the end of 2016.

A parallel scheme providing a permanent residence permit to those buying homes worth €300,000 yielded an additional €700 million over the same period, bringing the overall total to €4 billion.


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