New regulations to the citizenship by investment programme, have been approved by the cabinet which it says ties the scheme to anti-money laundering legislation.

The Interior Minister said the regulations would be sent urgently to the House.It is strongly believed that the linking of the scheme to anti-money laundering laws, was an important provision which would help in the execution and examination of applications for the so-called golden passports.

Another feature of the new programme is the tightening of regulations, so that there is a revocation of the granting of citizenship in a clear way as in cases where it was found that a candidate for naturalisation was either involved or has been convicted of a serious crime.

The government had previously “encountered some difficulties” in revoking passports.

Financial criteria to secure citizenship will remain the same. This involves a €2m investment plus the purchase of a house worth €500,000 plus VAT.

“We have made it possible for alternative investing options for those who will join the programme such as participating in businesses or participating in Cypriot companies by acquiring share capital,” interior Minister said.  Candidates must also give €75,000 towards the government’s housing policy and the same amount for the research and innovation foundation for the development of innovative business activities.

“This is being supplemented today with regulations that will make it no longer possible, after some in the past have made a mockery of the programme, to question the credibility of the programme that the Republic of Cyprus has established. We believe that by introducing the interconnection between the programme and the laws the central bank itself uses against money laundering, we are adding a new layer to the scheme,” the minister said.

Earlier this year, a European money laundering watchdog cautioned that the secretive investment-for-passports programme run by Cyprus was vulnerable to money laundering and fraught with risk.

The Council of Europe’s anti-money laundering body Moneyval called on the Cypriot authorities to pursue more aggressively money laundering from criminal proceeds generated outside of Cyprus, and take a more proactive approach to the freezing and confiscation of foreign proceeds.

Cyprus launched the scheme offering passports for an investment in 2013, with more than 3,000 people gaining citizenship through the programme. Moneyval, said that, although Cyprus had broadly taken measures to mitigate key money laundering risks, the risk of vulnerabilities in the investment programme had increased “exponentially” via real estate, the investment vehicle of choice.

Last November, the government announced it would start procedures to strip the citizenship of 26 individuals following revelations that passports had been granted to a suspect Malaysian businessman, persons tied to Cambodia’s authoritarian government and a Kenyan billionaire under investigation for tax evasion by the authorities in Kenya.

Interior minister said the decision to operate the investment programme, like any such investment programme in an EU country, “is an inalienable right of the nation-state and its national legislation”.

The government had already set a maximum of 700 naturalisations per year and we agree this was not the right time to reassess that number due to the economic fallout from the coronavirus pandemic.