For the last two weeks, I feel like a psychoanalyst. After a number of sensational headlines in the newspapers, many of my clients, who received Cypriot passports over the past 6 years, became slightly nervous. That is why I have decided to write a short article that will clarify the current situation with the Citizenship by Investment Programme in Cyprus.
Articles in the press began to appear on 20th October and were originally associated with the issuance of passports to eight relatives and close associates of the Prime Minister of Cambodia Hun Sen. From November 4th, there was a fuss in the press regarding Malaysian citizen Jho Low, who received his Cypriot passport in 2015.
In the best of traditions, journalists chose not to investigate the subject but just thoughtlessly threw sensational headlines: “Cyprus to Pull Citizenship for People Who Got Passports by Investing”, “The Archbishop expedited the issuance of a passport to a Malaysian criminal”, “The Cyprus citizenship program has reached a crisis moment”. Many would say that there is no such thing as bad publicity, but of course, such scandals do not help Cyprus. The storm will settle and the important role of citizenship through investment will not evaporate due to several individuals who should not have received these passports for a number of reasons.
Let’s look at the facts: Jho Low received his passport in 2015. Interpol only issued a red notice against him last year. At the time of obtaining the passport, passing all the due diligence checks, Jho Low’s criminal activities had not been detected. He also managed to prove his source of funds when completing the transaction for the purchase of the chosen real estate. Regarding the assistance of Archbishop Chrysostomos II – the church is one of the largest landowners in Cyprus and therefore sells and leases land to developers on a regular basis. The fact that the Archbishop helped the developer, on whose land the investment property was built, should not be surprising. Moreover, this did not speed up his application. In 2015, the procedure for obtaining a passport officially took 3 months. Some of my clients received passports in 2.5 months, as did Jho Low.
It is difficult to comment on the Hun Sen relatives’ situation. I think that the origin of their funds could not be tied to his political activities. The degree of relationship was not mentioned in the press. I do not defend these people and completely agree that, on the basis of facts that are available today, their citizenship should be revoked. Of course, “the son is not responsible for the father”, but not in the case of politicians, since in most cases their fortunes were made as a result of their political career.
Cyprus launched the citizenship by investment program in 2013 and processed 1864 applications. At the end of 2018, more than 3200 people received citizenship of the country, taking into account family members of each applicant. The withdrawal of 26 passports amounts to 0.8% of the total number of issued passports. I think if you analyse most naturalisation programmes, the number of errors over a period of 6 years may be much higher.
One should not forget that in many respects these are political games, which are heated by the opposition Communist Party of Cyprus AKEL. Without their active participation, these facts would hardly have reached such global prominence. To my surprise, no one put it in the context of other recent high-profile cases in the UK, including revoking British citizenship from Anna Chapman in 2010 for espionage and Shamima Begam in March 2019 for her involvement in the activities of the Islamic State in Syria. Deprivation of British citizenship is possible in accordance with Section 40 of the UK Citizenship Act of 1981. Usually, this happens due to allegations of fraud, the provision of false information or concealment of a material fact when obtaining citizenship, as well as in cases where a citizen is a threat to public welfare. Similar laws exist in the legislation of almost any country, therefore the withdrawal of citizenship among 26 citizens of Cyprus should be welcomed as a sign that no one can get away with fraud or deceit when it comes to naturalisation.
In any case, the program for obtaining citizenship through investment is not the main engine of the real estate market in Cyprus. The so-called “passport clients” account for less than 20% of all property sales. Despite the fact that real estate prices have been rising, starting from 2015, by an average of 5% per year, they have not yet reached the pre-crisis prices of 2008-2010. Cyprus is one of the most popular tourist destinations. Last year, the number of tourists amounted to almost 4 million, 7.8% more than in 2017. This is due to the excellent climate and the long tourist season, good infrastructure, security and the friendliness of the local population. In Cyprus, almost everyone speaks English, which this is very important for most tourists. Real estate intended for tourist rental yields 4-10% per annum and thus attracts many investors from all over the world. The tax residency program, which was launched in January 2017, is interesting to many entrepreneurs and senior executives of large global corporations. The program allows optimisation of taxation for people who are constantly traveling and do not spend 183 days a year in any one country. The economic forecast for Cyprus for 2020 remains positive – an increase of 3.2%. GDP per capita is US $ 25,000, one of the highest GDPs in the Mediterranean Region. Cyprus ranks 23rd in terms of living standards according to the Human Development Index.
I believe it is very positive that the President of Cyprus, Nikos Anastasiadis, reacted very quickly to the current situation and acknowledged the mistakes that occurred in the framework of the investment program for obtaining citizenship. For the overwhelming majority of people who are not involved in politics and criminal activity, the program continues to work without change and it is business as usual
Image credits:
1st image: The Towers, courtesy of Leptos
2nd image: The interior, courtesy of Park Lane Hôtel residency.
