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Cyprus to Tighten Golden Visa Regulations

Cyprus to Tighten Golden Visa Regulations

Following a series of scandals linked to Cyprus’ citizenship by investment scheme back in November 2019, the Cypriot government and parliament have moved to further reform the country’s Golden Visa program.

New ordinances are currently being discussed to tighten up the KYC and due diligence procedures required when reviewing applications of interested individuals and families.

These specific changes establish the revamped parameters to be followed in case an individual who received a Cypriot passport via this scheme is found to have engaged in criminal activities.

As reported by the Cyprus Mail, Interior Minister Nicos Nouris said these new rules “allow the state to withdraw Cypriot citizenship from a person if within 10 years of the date of naturalisation they have: been convicted in the Republic or any other country for a serious criminal offence which entails a prison sentence of five years or more; are wanted by Europol or Interpol for a serious criminal offence; or have been placed on a sanctions list.”

Furthermore, financial service providers selling the country’s citizenship by investment scheme have added responsibilities when it comes to screening potential investors. Licenses for companies offering this service will be doled out on a yearly basis, and firms will be deemed responsible for any problems arising with their clients.

Talking about these reforms, Nouris said, “The candidates are carefully vetted when they apply, and the providers for the candidates are also vetted. Once candidates are approved, their conduct as residents in Cyprus is reviewed each year for 10 years, and if they break our laws or engage in other undesirable activities, the passport can be revoked.”

“These regulations reinforce in the best possible way the credibility of the investment programme, while the key provisions relate mostly to linking the programme to money laundering laws,” he added.

“From now on,” said Nouris, “screening of applicants does not begin from the moment they file an application to the interior ministry, but rather once they select their service provider.”

Nouris also stressed the fact that there are now different investment options besides real estate available to interested parties, a change that is bound to strengthen and regularize the program.

“There is a wide choice of investment possible, and we privilege investment that develops young companies, high-tech, the stock market and other businesses – we hope the scheme will bring in funds that support innovation in our country,” Nouris concluded.

 Cyprus Golden Visa scheme

The opposition, however, argues that these reforms will have no long-term impact on cleaning up Cyprus’ Golden Visa scheme.

Eleni Mavrou, an MP with opposition party Akel, said, “The bills and regulations before us are characterised by ambiguities, they are overly complex and contain loopholes, which unfortunately leave open the possibility for creating the same problems we had in the past.”

“In short, this is more or less much of the same, and we are concerned that certain clauses disregard government zoning and favour a small number of large developers, rather than the economy as a whole,” Mavrou added.

Since its latest inception following the banking crisis of 2013, Cyprus’ citizenship by investment program has raked in billions of dollars for the country’s economy, particularly with investments in the real estate sector. As of the end of 2019, approximately 4,000 passports had been handed out as part of this Golden Visa scheme.

Back in November 2019, the Cypriot government stripped 26 foreign investors who had been linked to illicit activities of their passports. This list included citizens from Russia, Malaysia, Iran, China, Kenya and Cambodia.

Additionally, the European Union has also put pressure on Cyprus and other countries offering these sorts of schemes to eliminate them.

Back in April 2020, the European Commission’s Justice Chief Didier Reynders urged Cyprus, Bulgaria and Malta to shut down their Golden Visa programs.

Reynders said, “The Commission continues to monitor the developments in the three member states very closely, and it takes this occasion to re-iterate that this crisis [the covid-19 pandemic] and its impact must not be used as a reason to operate risky EU citizenship schemes.”

“On the contrary, I fear that the risk identified around these schemes can have a negative impact on other investments that will be key for the economic recovery of member states and the EU as a whole,” he added