The Institute of Certified Public Accountants (Selk) has urged its members to thoroughly examine the background of clients who apply for citizenship, issuing a directive on the Cyprus investment programme to assist in the uniform application of diligence measures.
“Citizenship programmes carry inherent risks relating to money laundering, corruption and bribery and tax evasion, primarily due to the characteristics of the target group being addressed, ie, high net-worth individuals,” the directive said.
“Thus, particular attention should be placed, and care should be exercised in addressing all money laundering and reputational risks associated with the particular service.”
The client should not only have sufficient resources the source of which need checking, but should also have a valid, legitimate and logical reason for wishing to obtain the Cypriot citizenship such as a business already established in the EU.
It also needs to be ascertained that the potential investment should contribute towards the further enhancement of the Cyprus economy at large.
The document sets out an approval process by which screening should be conducted via a combination of several resources, a UN and EU sanctions list, commercial databases, the internet, specific websites and media searches.
Documentation should not be limited to passport, CV and source of resources but needs to “include non-criminal and non-bankruptcy certificates issued by authorities in countries where the client has resided for the past five years.”
The publication of the directive follows a number of problems which arose from the lax handling of applications.
In January 2019 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.
A month later the government introduced a series of changes to the citizenship-by-investment scheme in a stated bid to make it more credible.
Last November the Cypriot government announced it would start procedures to strip the citizenship of 26 individuals following revelations that passports had been granted to a now-wanted Malaysian businessman, persons tied to Cambodia’s authoritarian government and a Kenyan billionaire who is under investigation for tax evasion by the authorities in Kenya.
The interior ministry has said it would review all passports granted before 2018 when stricter criteria and vetting instruments were put in place and reaffirmed the ban, introduced in February 2019, on advertising the citizenship-by-investment scheme.
“There were mistakes, it was a mistake not to have criteria, for instance, for high-risk persons,” Constantinos Petrides, then interior minister, admitted at the time.