Cyprus' scheme of selling golden visas and European Union passports to wealthy foreigners is open to corruption, money laundering and a conduit for criminals, a European money laundering watchdog has cautioned.
The European Union's MONEYVAL agency said in a report that, although Cyprus had broadly taken measures to mitigate key money laundering risks, the risk of vulnerabilities in the investment program had increased "exponentially" via real estate, the investment vehicle of choice.
"These risks have not been properly mitigated," it said. "The risks related to the Cyprus Investment Programme have not been assessed comprehensively."
The risks related to the Cyprus Investment Programme have not been assessed comprehensively"
Supervision of the real estate sector should be significantly enhanced, the MONEYVAL report said, saying there should be more preventive measures by real estate agents, noting that while Cyprus was co-operating with other countries it was "not very proactive" at freezing and confiscating foreign criminal proceeds.
Real estate is broadly known to be used by money launderers as a stable investment which can appreciate over time, and is normally subject to more limited scrutiny, according to a European Parliament research note issued in 2019, according to Reuters.
Cyprus began selling the golden visas in 2013 and has granted more than 3,000 to wealthy foreigners. Under the program, a minimum €2m investment can get a passport and instant visa-free travel throughout the European Union, of which Cyprus is a member.
In November, Cypriot authorities announced they would revoke the passports of 26 individuals, saying the criteria under which citizenship was granted to some people was flawed.
Reuters had reported in October that a number of Cambodians, including its police chief and finance minister, had acquired Cypriot citizenship.
Lawmakers from the Interior Committee of parliament were told on Monday the decision to strip passports could not proceed at present for legal reasons. "We have a problem with the law which can be fixed relatively easily," said George Perdikis, a lawmaker with the Greens party.
Apparently, the relevant law for granting investors citizenship lacks a supplementary clause on the process for revoking it.
Cyprus is also being accused by at least three foreign embassies of going easy on fake marriages.
The Cyprus News Agency reported that the government is aware of complaints against local authorities in connection with sham marriages conducted in a number of municipalities in which women from EU countries have civil unions with men from Africa or Asia.
The women are said to be paid for agreeing to the marriages, with the embassies of Romania and Portugal among those complaining about the scam, coming after Latvia last year raised a red flag over the problem.