Cypriot government asked to end ‘golden visa’ programme over multiple abuses

The Cyprus ‘golden visa’ scheme should be completely abolished while regular compliance checks should be carried out on all 5,800 beneficiaries, with those violating the scheme having their permits withdrawn, according to the country’s Audit Service.

The Cyprus Permanent Residence Programme provides eligible individuals and their families indefinite residence in the EU country against an investment of at least €300,000. This investment can be in real estate, a company with activities and staff on the island, or a Cyprus Collective Investment Organisation. The permit holder can apply for citizenship after five years of continuous residence in Cyprus.

But the programme’s future has been questioned after the Audit Service advised the Ministry of the Interior that it should abolish the programme altogether due to severe irregularities, a lack of oversight, and abuse of the system.

“Given the large number and seriousness of the findings in the randomly selected sample, we have expressed the opinion that one can reasonably infer carelessness in the drafting and implementation of the Programme in general and the inadequacy of control mechanisms. Given the position of the European Commission mentioned above, we suggested to the Ministry of the Interior to seriously consider the possibility of completely abolishing the Programme”.

It refers to a March 2022 recommendation from the Commission, which states that investor residence permit programs pose inherent security, money laundering, tax evasion and corruption risks for Member States and the European Union (EU).

The audit report continued that if the programme is continued, the authorities must take more steps to apply the law to those applying for the permit, and it should ensure adequate compliance on an ongoing basis.

A regulatory audit of the programme was carried out following a complaint to the Department of Population and Immigration Records (TAPM), which is responsible for overseeing applications.

Many issues were identified from the application and evaluation stage to ongoing compliance and monitoring. But by far, the most important finding was that TAPM does not conduct regular checks to verify compliance with the criteria after the immigration permit is granted. This means they cannot act on cancelling permits if an applicant ceases to comply with the requirements. 

In circumstances similar to Malta, the audit found that it was “the norm” for applicants to get their permit and then leave the country, with some having only spent two days in Cyprus at any time. Others were found to have then acquired permanent residence in another country while retaining their privileges in Cyprus. 

It was also found that several applicants did not reside in Cyprus for 12 months before the application.

Other irregularities include investments made by relatives, not by the applicant,  infringements of VAT law, the acceptance of unofficial proof of payment for investments, and failure to ascertain the origin of funds used for investments to meet the programme’s requirements.

If the programme is to be continued by the Cypriot authorities, the TAPM should strictly apply the relevant legislation and carry out regular checks to verify compliance with the economic and quality criteria.

In cases where violations of criteria or regulations are found, applications should not be accepted, and permits should be revoked.

Furthermore, initial and ongoing compliance with all provisions must be ascertained before granting Cypriot citizenship after the five years foreseen in the programme.

The Ministry of the Interior has accepted the recommendations made in the report but did not comment on the call to end the scheme altogether.

“The findings recorded in the audit service’s special report had already been identified by the ministry itself when it assumed governance, based on Moneyval’s relevant indications of the risk of abuse that existed due to the weaknesses of the programme,” a statement from the ministry said.

In 2020, Cyprus scrapped its Golden Passport scheme, otherwise known as citizenship by investment – a scheme Malta retains – over allegations of corruption involving the government, high-ranking officials, and applicants.

Malta is now the only country in the European Union which offers a passport in return for cash. In 2022, the European Commission referred Malta to the Court of Justice for the European Union for its scheme, stating it is incompatible with the principle of sincere cooperation or union citizenship.