The European Commission will warn that schemes in EU states to sell citizenship or residence to wealthy individuals could help foreign organised crime groups infiltrate the bloc and increase the risk of money laundering, corruption and tax evasion.
The warnings are included in a draft report, seen by Reuters, that is expected to be published on Wednesday by the European Union’s executive.
Although individuals who purchase citizenship and residence in EU states can do it for legitimate reasons, the commission said the schemes posed “risks of infiltration of non-EU organised crime groups in the economy, money laundering, corruption and tax evasion.”
Malta, Cyprus, and Bulgaria are the only members of the 28-nation EU which run schemes selling citizenship, while twenty states, including those three, sell residence permits.
In the three states rich foreigners can buy passports, which grant them unhindered access to most EU countries, for investments ranging between €1m and €2m.
The report said there were shortfalls among all three in checking the origins of wealth of individuals who purchased their citizenship.
The countries also did not allow easy identification of those who bought their passports.
They also circumvented EU rules that require “effective” residence in an EU state before granting citizenship.
The Commission said that EU states’ programmes to sell national residence to foreigners posed similar risks as citizenship schemes.
Twenty EU states currently sell residence permits to foreign citizens. Residence is sold against investments that range between less than €15,000 in Croatia to over €5m in Luxembourg and Slovakia, the report said.
The Cypriot government has been repeatedly criticised, domestically and overseas, for its citizenship-by-investment scheme.
A list of law companies and accounting firms acting on behalf of foreign nationals includes the president’s law firm and other prominent offices.
Close to 2,400 applications had been filed from May 2013 until August 2018.
Anastasiades maintains that since assuming office he has had nothing to do with the law firm and its business – although the main partners in the company are his daughters.
Foreign media outlets, including the Guardian, as well as certain quarters inside the EU have tried to put Cyprus’ feet to the fire over its investment scheme.
The matter also came up last early in December during a debate in the European Parliament in Strasbourg.
There, Victor Bostinaru, a Romanian politician and member of the Progressive Alliance of Socialists and Democrats, harangued Anastasiades over Cyprus’ programme.
Addressing Anastasiades, Bostinaru said: “And I think that, looking at the composition of the ones benefiting from this programme, you should work on lowering down [sic] and stop it. And this is not to intervene in any way in your internal decisions.”
In his answer, Anastasiades stated: “There is an intense targeting of Cyprus from certain quarters. The total citizenships granted via the scheme from 2013 to August 2018 did not exceed 4,700. This represents just 0.3 per cent of the total citizenships granted by other EU member states.”
He added: “I hear some saying that you [Cyprus] are allowing some people to acquire Cypriot citizenship at the expense – supposedly – of the security of the EU. But in Cyprus there has never been any act of terrorism. It is not in my country that acts of terrorism occur.
“It is not in my country where most football clubs belong to oligarchs of other countries, non-EU countries. Or that landmarks and large buildings and real estate have come into the hands of either Russian oligarchs or Arab oligarchs or others. Not that there is anything wrong with that.”