New Cypriots: how golden passports threaten EU security

New Cypriots: how golden passports threaten EU security

The European Commission for the first time presented a report on the practices of granting foreigners citizenship or residency in the European Union in exchange for investments. These schemes pose risks to the security of the EU, the commission concluded

Photo: Yves Herman / Reuters

Three EU countries offer citizenship to foreigners in exchange for investments (“golden passports”), and 20 EU countries - residence permits in exchange for investments (“golden visas”). These programs pose risks in terms of potential money laundering, tax evasion and corruption, according to a report by the European Commission (EU executive) on the “citizenship / residency for investment” schemes, published January 23 (.pdf).

Bulgaria, Cyprus and Malta from 2005, 2007 and 2013, respectively, have issued “golden passports” to foreigners:

in Bulgaria for this you need to invest € 1 million;

in Cyprus - from € 2 million plus purchase property on the island;

in Malta, it is required to contribute € 650 thousand to the national investment fund, to additionally invest € 150 thousand into the economy and to purchase or rent real estate.

EU citizenship without physical residence

In these three countries, the applicant does not even need actual residence in the territory, except for a visit to submit biometric data, submit an application, and have a personal interview. Thus, it is relatively easy to obtain EU citizenship and all rights and privileges associated with it, including free movement within the EU.

In addition, residency programs in exchange for investments are in place in 20 EU countries. The investment threshold varies from very low (about € 13.5 thousand for Croatia) to very high (more than € 5 million in Slovakia and Luxembourg). A residence permit in most EU countries makes it possible to travel freely within the Schengen zone for 90 days during any 180-day period.

The European Commission believes that such schemes pose risks to the security of the European Union, including the possibility of infiltration of organized criminal groups into the EU. Although Cyprus, Malta and Bulgaria require the applicant information about his “purity” from the point of view of criminal connections, the European Commission has identified “gray areas” when the applicant can bypass security filters. There are also risks in terms of money laundering and tax evasion. In addition, the transparency of citizenship schemes leaves much to be desired. Thus, neither Malta, nor Cyprus, nor Bulgaria provide complete information about the personalities of investors who acquire citizenship. If Malta at least annually publishes the names of those who received citizenship, Bulgaria and Cyprus do not provide such information.

Cyprus from 2008 to early 2018 granted citizenship to 1,685 foreign investors and 1,651 members of their families, wrote

Center for the Study of Corruption and Organized Crime (OCCRP). In particular, in 2017, Oleg Deripaska received Cyprus citizenship, the Guardian newspaper wrote and a representative of a businessman confirmed to RBC. In addition to Deripaska, Cypriot citizenship was also offered to the head of the Renova group, Viktor Vekselberg, but he refused.