The European Commission has written to Cyprus asking it to clarify a government decision in November to revoke the Cypriot citizenship of 26 individuals granted it under the country’s investor scheme, Reuters reported on Monday.
In the letter, the Commission’s director-general for justice Tiina Astola asked Nicosia whether it would investigate “possible misconduct” in these cases and how it intended to prevent people with high-risk profiles from getting passports in the future.
Astola’s letter asked for a response by January 6. There was no immediate response from the Cyprus government.
Last week Politis newspaper published a list it said were the 26 foreign investors being stripped of Cypriot citizenship obtained under the country’s controversial passports-for-investment scheme. Its report was not confirmed by the government.
The decision to rescind the citizenship – a highly unusual move — was announced by Interior Minister Constantinos Petrides earlier in November and followed a probe in the wake of an exclusive Reuters report on how members of Cambodia’s elite had obtained a Cyprus – and by extension an EU — passport under previous criteria.
“The Council of Ministers today affirmed the will of the government for strict adherence to the terms and conditions of the Cyprus investment programme,” Interior Minister Constantinos Petrides told journalists after a four-hour cabinet meeting on November 6. He did not disclose nationalities or identities of those affected but said they involved nine investment cases.
But according to Politis newspaper the 26 are:
Vladimir Stolyarenco, his wife and daughter
Αlexander Bondarenko, his wife and two sons
Oleg Deribaska, his son and daughter
Moreover, the eight Cambodians who are officials or relatives of the regime which is subject to sanctions for corruption and human rights violations:
Im Paulika and her husband Aun Pornmoniroth, Finance Minister
Choeung Sopheap and her husband Lao Meng Khin, member of parliament
Hum Kimleng and her husband Neth Savoeum, chief of police and their two daughters
Also on the list are five Chinese nationals who are linked to a case of fraud involving gold bars:
Zhang Shumin, his wife and their three children.
Two Kenyans implicated in a financial fraud case are also named by Politis:
Humphrey Kariuki Ndegwa and his wife Stelia Nasike W.
Last but not least on the list is the name of fugitive Malyasian financier Jho Taek Low.
Cyprus has had a citizenship for investment plan in place since 2013, under which a minimum 2 million euro investment can buy a passport and visa-free travel throughout the European Union.
Advertising the scheme is now banned. Authorities say the programme has gone through several transformations, and was overhauled in February 2019 with five different due diligence layers, compared to one in 2013.
In five years between the inception of the citizenship scheme and 2018, the Cypriot government approved 1,864 citizenship applications. Including family members, the number was more than 3,200, and is close to 4,000 today.
“If there were nine investment cases, concerning 26 people among 4,000 applications, it is logical that some would be problematic when controls weren’t strict,” Petrides said.
In its report on Monday, Reuters also said the European Commission had asked Malta to clarify how it intends to address Bank of Valletta’s shortcomings over its monitoring of foreign customers who applied to buy Maltese citizenship under a so-called “golden passport” scheme.
Malta, with a population of only 420,000, has sought to attract foreign capital with schemes such as the cash for passport programme, even though the EU has highlighted the risks of this potentially attracting the proceeds of criminal activities. Under the scheme, people can obtain a Maltese passport by investing in the country.
Last month, Reuters reported on a confidential decision by the European Central Bank that required Malta’s largest bank to take remedial action after an inspection exposed “severe shortcomings” that could have allowed money laundering or other criminal activities.
The ECB report said when foreign nationals seeking to buy passports under the scheme opened an account at Bank of Valletta (BoV), the bank registered them as Maltese citizens, which reduced their risk profile.
State-owned BoV said at the time it was strengthening its risk controls, governance structure and anti-financial crime defences.
A spokesman for BoV was not immediately available to comment on Monday.
In the letter sent to Maltese authorities on Friday, and seen by Reuters, Astola asked whether the government had acted on the ECB findings.
“Is there any specific follow-up given by the Maltese government to those parts of the report of the European Central Bank that concern the Individual Investor Programme?,” she said referring to the passport scheme. She asked for a response by Jan. 6.
In the letter, Astola said these schemes posed a number of risks, including money laundering, corruption and tax evasion.