The European Commission plans to issue recommendations to member states selling citizenship in return for investment in November, the EU justice and gender equality commissioner said in Nicosia on Friday, noting also that Cyprus must improve enforcement of anti-money laundering legislation..
“We had a good debate about the need to take all preventative steps not to allow bad people with bad intentions to enter the EU through such a scheme,” Vera Jourova said following a meeting with justice minister, Ionas Nicolaou.
Jourova said the commission fully respected a member-state’s right to establish such schemes but at the same time they should take into account that people granted citizenships also received all the rights of EU citizens.
The report will contain recommendations to governments, as well as standards on how to carry out checks on people applying for citizenship. Technocrats from Cyprus will also be invited to work with the commission before the report is issued.
The recommendations are not binding but ‘non-compliant’ countries can expect pressure from the EU “using all the legal and psychological tools” in our disposal, Jourova said.
Jourova and Nicolaou also discussed money laundering, with the commissioner saying that recent leaks about the dealings in certain tax havens were a reminder that all member-states had work to do to prevent the EU from becoming a “laundromat”.
“I am sure you will agree with me that we must do better in this,” she said, adding that all entry points for dirty money must be shut down.
Jourova said the EU had a very strong anti-money laundering legal framework but “we will discuss it with Cypriot authorities how to implement (the fourth EU directive) because we see some gaps there.”
The commissioner pledged to help the government prepare for the fifth directive which is even stricter.
Nicolaou said that Cyprus had no intention of granting citizenship to people linked to unlawful activities and measures in place went beyond those suggested by European directives. Any recommendations however, will be discussed.
The minister stressed that Cyprus is a regional services hub “and we are the first who are interested and care to safeguard these services”.
The citizenship-by-investment scheme, introduced in its current form four years ago, was last updated in May, when the government announced new measures to regulate the business.
Last year alone the scheme allowed 503 investors to acquire a Cypriot passport for themselves and a further 510 for family members.
Investors are required to invest at least €2m in real estate or a company or shares in one. Alternatively, investors may also invest €2m in securities offered by investment companies licensed by the Cyprus Securities and Exchange Commission, or a combination of the above.
Other issues discussed between Nicoalou and Jourova concerned justice reform, the modernisation and upgrading of the courts, and the speeding the administration of justice.
In an interview with Politis before her meetings in Cyprus, Jourova said the EU cannot force member countries to abandon naturalisation for investment programmes.
Calling the practice unfair as it favours people with money, she said the EU can nevertheless only provide guidance.
“It is up to the member states. But what we can do is ensure that conditions are appropriate. We want to guarantee that EU citizenship is given to people who really have links with the country where they apply for citizenship,” she said. “We are currently working on a report on all systems that grant EU citizenship and visas to investors by describing existing national law and practices. Our report will include guidance for member states, including the necessary checks for applicants.”
Asked what she thinks of both handing out visa or passports to people for money, she replied in both cases the person will gain access to the EU as a whole, though there is a difference. Visas are for a limited time, while naturalisation is for life.
Both cases, she went on to say, have an impact for security in the European Union as the person can move about freely in the area.