The House on Thursday passed a law aiming to tighten up screening of Foreign Direct Investment (FDI) where such investments are deemed to possibly impact national security.

The controls will apply to “sensitive strategic areas”.

A national mechanism will be established to monitor foreign investments.

MPs who voted in favour of the legislation said it was necessary for Cyprus to harmonise with the EU acquis.

They were alluding to the FDI Screening Regulation, which entered into force in October 2020. It establishes a framework for cooperation between EU member states and the European Commission to screen investments on security and public order grounds.

In Cyprus, any foreign investment of at least €2 million would come under the radar of the monitoring mechanism.

Land and immovable property acquisitions fall under the scope of the new law, but only wherever this real estate is designated as being related to “vital infrastructures”.

The government will be mapping out these “vital infrastructures” across the island. Until this work is done, the finance ministry will issue guidelines in order to facilitate prospective foreign investors.

The legislation clarifies that individuals holding dual nationality shall not be considered foreign investors.

As for designated foreign investors, they must inform the national FDI monitoring authority of their intention to invest. The authority may impose conditions. It can also impose fines if provisions of the law are breached.

During Thursday’s plenary session, opposition party Akel tried to introduce a number of amendments – they were all defeated.