Interior Minister Nouris: Invest for Passport Programme is secure and strong
This article was posted in CyprusMail on June 14, 2020.
Interior minister says Cypriot investment programme is secure and strong
Across Europe, 10 EU member states, including Cyprus, offer either residency or citizenship in exchange for investment. International organisations have long criticised these programmes, but the Cyprus government has not only addressed these criticisms in its new proposal, but also improved programme security and administration, as Interior Minister Nicos Nouris told the Sunday Mail.
“Security is strongly improved,” 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.”
Nouris pointed to the application of the anti-money laundering legislation with the programme as another important improvement. “This is the law approved by the EU and implemented by the banks,” he noted.
Nouris explained that providers of candidates are vetted again every year by a special interior ministry committee. “Providers must show that they are respecting the rules,” he added.
The Cyprus programme had also been criticised in the past because only real estate investment was considered for the scheme.
“This is no longer the case,” Nouris insisted. “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.”
In addition, the funds must remain in Cyprus.
“The financial criteria remain at the same level as previously: An investment of €2 million, plus a purchase of a house is required, which should be maintained by the investor, worth €500,000 plus VAT.”
There have also been significant administrative improvements: “Processing applications has taken long in the past; we have now accelerated the process to six months.”
So, has the criticism levelled at the Cyprus scheme in the past been addressed?
“We think, given all of the changes we’ve made, that such criticism is no longer warranted,” Nouris said. “And, while the pandemic has caused the number of applications to the scheme to be reduced, we expect that to change and to see the number of applications increasing rapidly.”
Other countries have lagged behind in addressing criticism from the likes of Transparency International and Global Witness.
Schemes selling citizenship or residency have brought in an estimated €25 billion of investment to EU nations over the past 10 years, according to a report by Transparency International.
It is interesting to compare the Cyprus programme with that of Portugal.
Portugal’s Golden Visa programme has proven to be the most popular scheme in Europe with investors attracted to its flexibility. And Portugal has issued more than 10,000 golden visas, far more than Cyprus, according to the report, earning the country about €670 million annually.
Launched in 2012 the investor visa programme has been actively promoted internationally by the Portuguese government. An investment of €500,000 (or €350,000 reduced option) in real estate in Portugal will gain a residency permit for a family including dependent children. The golden visa can be renewed every two years providing the applicant spends two weeks in the country every two years.
“But Portugal, in spite of recent reviews and changes in the programme, do not seem to take into account an applicant’s source of funds or wealth when analysing applications,” Transparency International has complained. This is of particular concern as the top nationalities making application for the golden visas in Portugal are Chinese and Russian citizens.
What’s more, Portugal, unlike Cyprus, puts 95 per cent of the funds in real estate. In Portugal, there have been 6,141 investments in real estate properties as of August 2018, compared with just 12 investments in employment creation.
Like Portugal, the UK has granted a very high number of golden visas – more than 10,000. There are two levels of investment: £2 million buys 40 months of residency, followed by a review to grant two years more. Funds must be placed in a bank account – there are no other criteria for vetting. The money must be invested for five years within the UK, but there is a wide choice of investment targets. An investment of £10 million allows an investor to obtain the visa within two months – critics point out that this leaves very little time for vetting a candidate.
“In fact, the success rates of applicants seem to indicate that the UK is not particularly selective, raising doubts about the strictness of checks and controls conducted on applicants. The UK, in particular, has granted residency to over 90 per cent of their applicants,” said Transparency International. At one point, the UK was obliged to consider revoking the golden visas from “a significant number of residents”.
The UK earns about £500 million per year by selling golden visas. Transparency International has shown that, for many years, those who invested £10 million or more were not investigated over the source of their income. What’s more, UK banks assumed that golden passport receivers had been vetted by the government, so accepted the funds they brought into accounts without any checks.
“During this ‘blind faith period’ over 3,000 high-net-worth individuals entered the UK, bringing with them at least £3.15 billion of questionable legitimacy,” Transparency International said.
One might add one more additional comparison – that of Turkey (although Turkey is not an EU nation).
It is worth noting that the Turkish programme was updated last year. “Under the new scheme, a would-be citizen can qualify by putting $500,000 into fixed capital or depositing the same amount in a bank, a figure reduced from $3m. The threshold for property investment has been cut from $1m to $250,000, a rate widely seen as a bid to help boost a flagging construction industry,” the Financial Times points out.
Compared to such wild levels of variation among golden visa schemes, the new Cypriot investment programme is particularly strict and secure.