Earlier this month, an undercover exposé by Al Jazeera rocked the global investment migration community, uncovering unethical and unsavory behavior by a multitude of actors involved in the Cyprus Citizenship by Investment Program. The ensuing scandal led to the resignation of a powerful and well-connected Member of the Cyprus Parliament featured prominently in the report, as well as the cancellation of the program effective November 1, 2020. Notably, its residency by investment program remains unaffected.
By way of background, the Cyprus Citizenship by Investment Program allowed for the granting of citizenship upon the investment of EUR 2,000,000 or more in real estate, businesses or certain types of financial instruments. Investments higher than the minimum generally led to more favorable treatment in application processing.
While the program may have been successful for thousands of families, those captured on camera by Al Jazeera may have poisoned the well for years to come. There really is no substitution for watching the exposé in its entirety, which sets forth a web of interconnected actors who were willing to cut corners and pressure civil servants and banks tasked with due diligence in exchange for attracting a large investment from a fictitious Chinese investor convicted of money laundering and on the run from authorities.
Importantly, this past week, Investment Migration Insider reported that the European Commission has commenced infringement actions against Cyprus as well as Malta, accusing both countries of conducting programs incompatible with the Treaty of the European Union, a move which could spur legal actions between the EU and two of its member states. Notably Malta is in the process of retooling its program with formal announcement of its reopening expected soon. Some industry insiders consider the infringement action against Malta as perhaps being collateral damage in the wake of the bombshell revelations relating to Cyprus.
My particular take on this scandal – for what it is worth – is that this incident reflects very little on the merit and standards of residency and citizenship by investment (RCBI) programs themselves. A common theme throughout the exposé was that the systems enacted by the Cypriot government’s civil service and banks were too stringent to allow for effective money laundering and the naturalization of a criminal investor. The only way for the application to bypass those standards was to employ a legion of corrupt politicians and migration industry professionals. The problem, however, was that every party caught on camera was all too willing to supply that corrupt influence against what was supposed to be a legal, fair, and equally applicable process. Shockingly, the parties offered their illicit help seemingly without even doing the most basic due diligence on the hypothetical individual himself.
So what does this mean for the European immigration by investment scene? With Cyprus’ sudden exit from the global competition for investors (perhaps only temporarily), one such immediate winner could be the Portuguese Golden Visa, especially as the program attracts more American investors than ever before. Cyprus’ exit could also be a boon for Malta’s CIP relaunch, provided that it survives the EC’s increasing scrutiny. The scandal might also push applicants to consider non EU-programs such as New Zealand, Australia, Canada, or elsewhere.
Our law firm maintains a network with foreign immigration professionals from around the world, boasting decades of expertise in their particular countries’ investment migration protocols. For more information regarding outbound immigration by investment, contact us today