The Cyprus Government on Friday issued a statement following a Reuters report on 16th October 2019 on citizens from Cambodia who have been granted the Cypriot citizenship under the Cyprus Investment Programme. The Ministry of Interior explains in detail how the Programme works, but points out that the policy of the Government is not to comment publicly on isolated cases.
According to the announcement by the Interior Ministry, the Cyprus Investment Programme involves supervision control, in order to avoid abuse, and is continuously evaluated and reinforced, "so that the whole programme becomes more trustworthy and transparent".
It is noted that since 2013, when the Programme was announced, the applicants must have no previous criminal record and for this reason, they must provide a certification of a clear criminal record by their country of origin and their country of residence (if this is a different one). In addition, the Programme provides that the applicants must not be included in the list of individuals whose properties are under freezing orders within the EU.
In the Programme’s latest revision, which was performed on 13th February 2019, two additional safeguard measures were included. In particular, the applicants must be holders of a Schengen visa in force and those whose application for a citizenship in any other EU member state has been rejected cannot apply for a Cypriot citizenship in the framework of the Program.
The Ministry adds that as far as the financial aspect of the Programme is concerned, since 2013 it requires that all financial transactions demanded for the investments must be conducted through Cypriot banks.
"The aim of this obligation is to safeguard that all incoming capitals and interested parts undergo all supervision controls for anti-money laundering acts applied by the Cyprus banks. All these controls are based on the relevant directives ordered by the Central Bank of Cyprus," it is noted.
Moreover, the Ministry says, in order to safeguard the application of this requirement, the applicants have to include copies of their statements of transactions in their applications. It is considered to be a sine qua non condition that transactions in cash are not accepted for Programme applications.
This prerequisite is in line with the EU directives for its anti-money laundering efforts and this is a fact recognized in the EU Council’s report for the programmes for the acquirement of residence permits and citizenships by investors within the EU, which was released in January 2019.
As far as the Programme`s due diligence checks are concerned, all applicants are forwarded for check by the state security authorities. In 2018, the Government decided to enhance these due diligence checks.
As a first step, the additional evaluation of applicants through a commercial database, provided by a specialized due diligence firm, was decided. In addition to the above, the application of enhanced due diligence checks was further decided, via cooperation with three specialized due diligence firms.
The Ministry also says that these firms have been found through an open call for tendering process that began in April 2019 and that at the moment, the process is at its final stage and the signing of contacts remains to be completed.
After that and with no delay, all due diligence checks will be conducted to all applicants, it is noted.
According to the statement by the Ministry, in July 2019, the Council of Ministers has announced clarifications on the existing Programme performed on 13.2.2019 and mainly on high risk applicants. It has also made public all categories of persons who are not eligible applicants.
These categories are:
I.Politically exposed persons, who hold state positions or have held a state position up to the last five years.
II. Persons under criminal investigation even if they have not been charged.
III. Persons under investigation who are charged and on trial.
IV. Persons who have been sentenced to imprisonment for serious offences (i.e. bribing by a civil servant, tax evasion, etc.) and whose sentence has been barred
V. Persons linked to legal entities on whose restraining orders have been imposed by the EU, i.e. stakeholders, high-rank company managers of companies which are included in the sanctions list.
VI.Persons who were linked to legal entities on whose restraining orders have been imposed by the EU, but are no longer linked, i.e. stakeholders, high-rank company managers of companies which are included in the sanctions list, which were linked with the particular companies when the inclusion in the sanction list was imposed.
VII. Persons who have been imposed sanctions by third countries (i.e. the USA, Ukraine, Russia).
VIII. Persons linked to legal entities who have been imposed sanctions by third countries.
IX. Persons under investigation or charged for criminal acts who are on the EUROPOL or INTERPOL list.
X. Persons who were under investigation or charged for criminal acts and were on the EUROPOL or INTERPOL list and no longer are.
XI. Persons who are imposed sanctions by the UN Security Council.
Also, it must be noted that in 2018 the Government decided the introduction of control procedures for the supervision of the constant increase in the number of natural persons and legal entities that provide administrative services for the Programme. Amongst others, an obligation was introduced for their registration to the “Registry of Service Providers for the Cyprus Investment Programme”, as well as the obligation to implement a relevant “Code of Conduct”, which includes the basic principles which the Providers must apply, their obligations towards their clients and to the Programme, as well as any consequences in cases of non-compliance.
One of the obligations of the Service Providers – as defined in the Code of Conduct – is to apply controls of due diligence to their clients, including the confirmation of the origin and the legality of the investment funds. Also, the applications of the clients must be accompanied by a due diligence report from an internationally approved electronic database for which an access fee is paid. All of the above, were implemented in June 2018 and the first Registry was drawn on 31st July 2018.