One modern economic invention of many developing countries to attract investor interest is the so-called “Golden Passport” or the promise to commit a certain amount of money to the local economy in exchange for a passport for the investor from the national government.
This system has attracted millions of investors around the world, including real estate investors in Toronto, Canada, and in Cyprus.
But 26 such investors could lose their golden passports as the island nation seeks to join the Schengen zone – a prerequisite of which is that the island nation conform to greater EU laws.
Obtaining such a pass reportedly entailed financial commitments of some €2 million according to a report from the BBC. Other countries that are currently evaluating their golden passport schemes include Bulgaria and Malta.
One concern for Brussels, in particular, is that these golden passports and the monies attached to them could be used to mask fraud.
Of the 26 investors that will lose their passports, the BBC reports that the roster includes 9 Russians, 8 Cambodians, and five Chinese nationals.
The remaining individuals came from a smattering of countries including Malaysia, Kenya, and Iran, reports indicate. Interior Minister Constantinos Petrides pointed the finger at lax local standards when it came to issuing golden passports for the reason as to why Cyprus might have allowed these questionable investors into such a program.
The minister said to the press, “It was a mistake not to have criteria, for instance, for high-risk persons.”
The European Union’s concern isn’t just for fraud in its most general sense but also for the infiltration of Cyprus and other nations organized crime via the golden passport system as well as the potential for applicants to use these passports and the rights they grant for the purposes of tax evasion in their home countries.
As part of a broader evaluation, Petrides and the Interior Ministry will examine all golden passports issued prior to 2018.
The minister said of the review, “This is according to guidelines from the EU, that when the criteria change, there should be second checks.”
Per the present rules system, anyone under international sanction or who is convicted of a serious crime is excluded from participating in the golden visa program. Other individuals include “politically exposed persons,” or PEPs, who are government officials with prominent status in foreign countries.
One impetus for the review might be infamous Malaysian con man Jho Low of the 1MDB fraud.
After siphoning hundreds of millions of dollars from a Malaysian state development fund, Jho Low and his family went across the world buying up properties and luxury goods that later were surrendered to the US government as part of a deal made in October of 2019 with Low wherein he returned certain assets without admitting guilt.
He currently remains at large and is believed to be on a yacht he purchased with the ill gotten funds. Other major applicants for the Cypriot passport include Russian oligarch Oleg Deripaska who is believed to be involved in money laundering and other crimes, some of which have gotten him blacklisted from the United States.