Back to top

Cyprus Suspends Its Citizenship by Investment Program

Cyprus Suspends Its Citizenship by Investment Program

Following an undercover investigation by Al Jazeera, the Cypriot government announced it would be suspending its popular citizenship by investment scheme on November 1, 2020.

In an hour-long documentary that has rocked the Mediterranean island nation, reporters for the Qatar-based news agency revealed some of the corrupt practices used by real estate agents, lawyers, members of parliament and even the parliamentary speaker to offer EU passports to shady investors.

More specifically, the film shows how people involved in this scheme skirted past existing Cypriot KYC and AML regulations to sell passports to clients with criminal records.

Among the people caught in the middle of this imbroglio are parliamentary speaker Demetris Syllouris and MP Christakis Giovanis, who also owns one of the island’s most important real estate developers. Both have resigned from their posts as a result of the disclosures.

According to Al Jazeera, those implicated in the documentary have “defended their actions, saying they had not broken the law and that they were only fishing for information to later be handed over to Cyprus’s anti-money laundering unit.”

Following the video’s release on Monday, the Cypriot president and his staff met on Tuesday and opted to scrap the citizenship by investment program in its current iteration as a result of its weaknesses and the fact that it allowed for parties involved to abuse of its main requirements.

A statement from the Ministries of Interior and Finance on the government’s decision to suspend the program said it “was based on the long-standing weaknesses but also on the abusive exploitation of the provisions of the programme.”

This entire revelation has also led Cyprus’ attorney general Giorgos Savvides to open a full-scale investigation into the matter with the help of local police authorities.

In a statement, Savvides said, “What has been published in the last few hours by the Al Jazeera news network is causing outrage, anger and concern among the people.”

Europe Reacts to the Investigation into Cyprus’ Citizenship by Investment Scheme

The European Union was quick to condemn these findings and will open an investigation into Cyprus’ passport program.

Christian Wigand, the spokesperson for the European Commission, said, “We watched in disbelief how high-level officials were trading European citizenship for financial gains,” adding that the Commission’s “President von der Leyen was clear when saying that European values are not for sale.”

 “The Commission has frequently raised its serious concerns about investor citizenship schemes, also directly with the Cypriot authorities. The Commission is currently looking at compliance with EU law of the Cypriot scheme in view of possible infringement proceedings.”

Additionally, a plenary debate is planned for next week in the European Parliament as explained by European Green Party MEP Sven Giegold.

What’s the Future of Cyprus’ Citizenship by Investment Program?

According to In-Cyprus, this documentary “comes two months after Al Jazeera’s Investigative Unit published The Cyprus Papers, a leak of 1,400 documents showing Cyprus regularly failed to adhere to its own laws and allowed convicted criminals and fugitives to obtain its citizenship.”

In an effort to stem the damage done by this news, the Cypriot government recently started the process to recommended revoking the passports from seven suspect investors, including Malaysian investor Low Taek Jho, Iranians Mehdi Ebrahimi Eshratabadi and Maleksabet Ebrahimi, and Cambodians Sopheap Choeung and Lau Ming Kan, all individuals who have been implicated in criminal activities.

This program, which was set up in its current form back in 2013 following the economic crisis, has brought into the country more than 7 billion Euros, accruing 2.5 million Euros per passport sold with most of the investment going into the real estate sector.

Marios Clerides, former head of Cyprus’ Securities and Exchange Commission (CySEC), asserted that any reiteration of this program has to be highly transparent if the country wants to instill confidence and attract foreign investment.

Speaking to the Cyprus Mail, Clerides said, “In order for the country to redeem itself, it is now necessary to convince everyone that laws and rules are followed to the letter.”

“Should the programme be reinstated, it will have to be much more transparent so that no one could have doubts on whether it will retort to an illegal activity,” Clerides said, adding that “investors should not have to think they will do business with unreliable and shady people.”

Additionally, Clerides explained, it is still not clear how much money this program has actually contributed to the country’s GDP. Some estimates suggest it has only amounted to 0.3 percent of GDP

“We do not know how much money that entered in the country through the scheme was actually spent or remained here, that is another thing to take under consideration should it return in a different form,” Clerides concluded.

Ruling party DISY has already said it will submit a new proposal for the country’s passport scheme once the investigation into these wrongdoings is finalized.