Foreign nationals are reportedly scrambling to acquire Cypriot passports via the citizenship-by-investment scheme, ahead of tighter criteria kicking in on May 15.
According to daily Phileleftheros, the rush will likely result in prematurely reaching the ceiling of 700 naturalizations granted per year.
Citing the ‘Cyprus Real Estate Market Report’ by KPMG, the paper said the uptick in applications was especially noted in the last quarter of 2018, when purchases of properties valued at €1m and above increased by 27 per cent compared to the last quarter of 2017.
Of the 730 transactions – worth €1m and over – occurring throughout 2018, more than a third were executed in the fourth quarter.
Although the new criteria for the scheme start applying on May 15, it is possible that a slight extension may be granted to certain applicants – for instance those who already possess a bill of sale for a property but have not managed to file all the required paperwork by that deadline.
In these cases, if an applicant submits the bill of sale prior to May 15, but not the other documentation, his or her application for naturalization could be assessed based on the existing, looser criteria.
Back in February – and following criticism about lack of transparency from quarters overseas – the government introduced changes to the citizenship-by-investment programme, tightening up requirements.
Among the changes are stricter criteria for applicants who will undergo background checks by a specialised foreign firm. Applicants will also be obliged to already possess a Schengen visa – a short-stay visa that allows a person to travel to any members of the Schengen Area for up to 90 days for tourism or business purposes.
Applicants who have already been rejected by other EU states will be excluded.
Also, the fees payable to the government will go up by €75,000, which will be diverted to research and development as well as to the land development organisation to fund affordable housing schemes.
In January, the European Commission warned that programmes of EU states, including Cyprus, to sell passports and visas to wealthy foreigners could help organised crime groups infiltrate the bloc and raise the risk of money laundering, corruption and tax evasion.
The warning was contained in the first report the EU executive produced over the multi-billion-dollar industry of so-called “investment migration,” which allows rich individuals to buy citizenship or residence in countries that put them on sale.
It highlighted shortfalls in the Cypriot and Maltese schemes which do not sufficiently check the origins of the wealth of individuals and do not allow their easy identification.
Although legal, these schemes are sometimes run in opaque ways and without sufficient checks on those who acquire passports and visas, the Commission said, mostly raising concerns about the programmes in Malta and Cyprus.
The investment amount is €2m 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 €2.5m, 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.