In four out of five citizenship by investment applications examined by the audit service, authorities had failed to adequately verify the provenance of the money used in the transactions and apparently ignored red flags such as an applicant being under investigation by Interpol while another was on the EU’s sanctions list, it emerged on Thursday.
According to the audit-service’s report one of the applicants was a politically exposed person (PEP) who did not disclose the fact, while a second applicant was included in reports that his name had been placed on the EU sanctions list.
A third individual declared the fact they were a PEP, which however had not been taken into consideration, while a fourth case was under investigation by Interpol in their country for financial crime.
“Parliament had not been informed about the aforementioned cases as is provided by the law,” the report said.
According to the information given to the audit-service, of the 1,597 applications filed after May 2018, 917 were approved, 35 were rejected and 10 withdrawn.
There were 635 outstanding applications, the report said. Of those, 91 contained notes referring to money laundering, false information and documents, high-risk individuals, possible criminal cases, dubious income sources, tax evasion, fraud, bribery, inclusion in the Panama Papers, and others.
“It is the view of our service that these applications, many of which had been submitted over 15 months ago … should have already been rejected, something we could have verified if further investigation had not been obstructed,” the report said.
Though cooperating initially, the interior ministry decided not to provide any further information to the auditor-general on the attorney-general’s advice.
Later in the day, the interior ministry – in charge of naturalisations – dismissed the auditor-general’s report as “patchy” and said the dossier “cherry-picks a certain time period.”
The ministry said also that Auditor-general Odysseas Michaelides was “for the umpteenth time operating outside the scope of his competence.”
It said it would refrain from engaging in a public back-and-forth with the auditor-general, and rather would wait for the outcome of a broader probe into naturalisations covering the 2007 to August 2020 period.
According to the report, 23 approved applications contained instructions from the interior minister for the process to be expedited.
The average time the applications in question took to be completed was 169 days – the minimum was 101 days and the maximum 283 – compared with the rest, which took an average 327 days (minimum 215, maximum 716).
The auditor also spotted three cases where citizenship had been granted without meeting the investment criteria; in one of them, the applicant sold the property after receiving citizenship before the required three years had passed.
There was also reasonable suspicion that in three of the cases examined the real investor was the husband despite the application being filed by the wife, perhaps because they were high-risk individuals and wanted to avoid having to explain the origin of the money.
The auditor-general decided to launch a probe into the programme after Al Jazeera, citing leaked confidential documents in its possession, reported that Cyprus had granted citizenships to dubious individuals.
The audit service said it wanted to investigate the procedures applied by the ministries of finance and interior in granting citizenships to foreign investors, mainly whether these individuals, and others who were involved in transactions, had been handled properly by the tax department.
After handing the service some information, the interior ministry refused to give up any other documents arguing they would be given to a three-member investigating committee appointed by the attorney-general to probe the programme since its start in 2008.