The Cyprus government’s openness to foreign investment meant that criminals could move throughout the European Union.
The “Papers from Cyprus” consisted of a scheme revealed in 2020 by the Qatar television station Al Jazeera, whose objective was to obtain passports from this country by foreign citizens, did not have the same dissemination as the “Papers of Panama”, in which the existence of 214.00 companies unknown to the tax administrations whose owners were heads of state, rulers and millionaires among many anonymous citizens was revealed.
However, the facts reported by the Qatar television network are extremely important. The scheme in question consisted of the issuing of passports to foreign citizens, with the proviso that they invest in Cyprus a minimum amount of two million euros.
The only check that the Cyprus authorities carried out on the suitability of candidates for obtaining passports was the presentation of a criminal record. There was no verification as to the authenticity of that document, nor the possibility that the applicant was being investigated.
This opening of the Cyprus government to foreign investment has resulted in common criminals, Russian oligarchs, and government officials from several countries already convicted or under investigation, having obtained passports from that country and thus being able to circulate throughout the European Union.
With regard to claimants who exercised government functions, there was a particularity that many of them were convicted (despite the obligation to present a criminal record) or to be investigated for the practice of crimes of corruption.
In many countries, including Cyprus, citizens who exercise government functions have the status of Politically Exposed Persons (PEP), a statute that obliges entities that do business with these people to take measures to learn about their heritage, as well as their origin.
This obligation has the objective of combating corruption, but in most countries, it is applied in a very broad way, PEP is considered to be people who performed in the last (12 months to five years, depending on the countries) public functions of heads of state, government officials, deputies, judges, and mayors.
With regard to Cyprus, until July 2019, there was no control over the attribution of passports to Politically Exposed Persons, after that date, the PEP that exercised public functions in the last five years came under control. In July 2020, the requirements were lightened and control started to be exercised only in relation to PEP that exercised public functions in the last 12 months.
Regardless of the requirements that Cyprus legislation currently sets, the truth is that this country has lost credibility at the international level as a result of in the past has granted passports to criminals and thus facilitating its activity within the European Union.
In addition to Cyprus, there are other countries and territories where it is possible to obtain citizenship and a second passport which are also considered by the national laws of many States to have privileged taxation regimes (ie tax havens), namely:
– Antigua and Barbuda, where foreign citizens only need to make a donation of $ 100,000 to the territory’s development fund and buy a property. The passport issued by this jurisdiction gives access to 151 destinations.
– Dominica imposes as a requirement the monetary contribution to the so-called Economic Diversification Fund and the investment in a luxury property, including hotels or resorts. And Grenada, where it is possible to obtain citizenship in two ways: the delivery of a contribution of 150,000 dollars to the Grenada National Transformation Fund or the investment in real estate in a minimum amount of 350,000 dollars.
When a country is recognized for being weak in the allocation of passports or citizenship, the consequences are felt at different levels, namely in the restrictions on the entry of its citizens in other States.
Thus, what happened in Cyprus should serve as an example to the other countries. It should serve to demonstrate that the eagerness to attract foreign investment cannot remove the rigor in combating fraud in the attribution of official documents and in the control of the movement of capital.