Nicosia is set to revoke Cyprus citizenship from at least 26 suspect investors as soon as the House of Representatives passes a law on tighter controls approved by cabinet earlier this week.
The cabinet on Wednesday approved tougher rules for its tarnished citizenship for investment scheme by tying it to anti-money laundering legislation.
The law amendment gives authorities the right to revoke citizenship, which is retrospective for up to 10 years, allowing them to reevaluate whether naturalized foreign investors violated provisions included in the new legislation.
The decision to revoke citizenship from individuals was taken in November 2019, when a number of corruption scandals surfaced involving investors who had acquired Cyprus passports.
Foreign investors from countries including Russia, Cambodia, Malaysia and Iran were linked to authoritarian governments or were being sought by authorities over their involvement in large-scale money laundering.
The government had then decided that 26 investors would be stripped of their Cypriot nationality.
Malaysian multi-billionaire Jho Low was among them.
Jho Low was allegedly involved in a multi-billion-dollar scandal that broke in 2015 when he was managing an investment firm 1Malaysia Development Berhad headed by the then prime minister of Malaysia Najib Razak.
According to Bloomberg, Low allegedly created a series of shell companies through which he channelled hundreds of millions, many of which ended up in his accounts. He denies any wrongdoing.
Cypriot daily Politis said that as soon as the scandal broke, implicating 30 executives of the US investment firm Goldman Sacs, he submitted a request to become a Cypriot citizen in exchange for a EUR 5 mln investment.
The government’s effort to revoke passports of some investors hit a legal snag regarding personal data.
Under the new bill, citizenship can be revoked if an investor is handed a jail sentence of more than five years in any country if they are wanted by Interpol or Europol if they do not comply with the criteria and additional preconditions set out, or subject to international sanctions.
The new rules approved by cabinet and sent to the House of Representatives for approval introduces additional checks throughout the citizenship process for investors.
A committee to supervise and check applicants will evolve from a unit currently operating under the Finance Ministry.
It will comprise of MPs from the House finance and justice committees and the general manager of Invest Cyprus.
However, even with this new regime, the procedure of revoking passports is not expected to be easy as a number of the affected individuals are preparing for a legal battle.
Penalties will also be applicable for managers and firms handling due diligence procedures of prospective investors.
Failure to comply will be subject to a fine of up to €350,000.
Passport to EU
Cyprus offers an EU passport for an investment of at least €2 mln and purchase of a €500,000 residence plus tax.
It is one of the few member states to offer an EU passport for investment.
Last year the EU told member states to tighten checks on non-EU nationals seeking passports via investments.
Brussels is concerned that the so-called “golden passports” may be a backdoor into the EU for criminal gangs or government officials to launder huge sums or evade tax.
Under the new rules, investors will have a wider array of investment choices, like buying up stock in Cypriot companies.
Investors will also have to pay a €150,000 application fee with the money earmarked for housing and entrepreneurship schemes.
“The new regulations no longer leave the program open to ridicule, as some have done in the recent past, and leave no doubt as to its credibility,” Interior Minister Nicos Nouris said.
The number of citizenships issued in the scheme will be capped at 700 a year.
Some 4,000 Cypriot passports were issued to investors under the program, generating at least €7 bln since 2013.