Two Russian billionaires under U.S. sanctions could be subject to investigations into Cypriot passports they obtained through a citizenship-by-investment scheme, according to Russian media.
Cypriot Interior Minister Constandinos Petrides said last week that the government will apply enhanced due diligence checks on foreign nationals who have applied for, or previously received, passports via the citizenship-by-investment scheme. Individuals can obtain a Cypriot passport if they make certain high-value real estate investments and mandatory donations, so long as they meet other conditions.
Known as “golden visas,” these passports pose significant money laundering and financial crime risk, according to transparency groups. Cyprus introduced its golden visa scheme in 2007, but the Cypriot cabinet approved some changes to its offering after a study released in January by the European Commission warned about the dangers of the programs.
Numerous investigations into golden visas conducted by various media organizations have revealed that wealthy Russian nationals have obtained them. Russian media outlets noted that Oleg Deripaska and Viktor Vekselberg may qualify to be investigated under the new audit announced by Petrides.
Deripaska and Vekselberg were both sanctioned in April 2018 by the U.S. Treasury Department. Deripaska’s application for a Cypriot passport was approved in 2017. Though Russian media reports say Vekselberg obtained Cypriot citizenship in 2017, The Guardian and OCCRP reported in 2018 that he appears to hold only Russian citizenship, citing Vekselberg’s representative.
The announcement by Petrides followed an investigative report published by Reuters about the corrupt practices of the Cambodian elite who applied for Cypriot passports. And this week Cypriot President Nicos Anastasiades pledged to revoke any golden visas “mistakenly” granted to wealthy investors after reports saying Malaysian businessman Jho Low got one in 2015 as investigators pursued him on allegations of corruption. Low, a fugitive from U.S. criminal charges, agreed last week in a civil forfeiture settlement to give up more than $700 million in assets purchased using funds from a multibillion-dollar fraud of a Malaysian investment fund.
Petrides named three firms that had won an open tender to conduct the audit - U.S.-based Sterling Diligence and Kroll, together with U.K. based S-RM Intelligence and Risk Consulting.
"Using enhanced due diligence methods available today, an additional internal audit will be conducted, investigating the naturalization that took place before 2018, that is, before the more stringent criteria were applied. This investigation will show whether persons who have been granted Cypriot citizenship face criminal charges and/or European restrictive measures,” Petrides was quoted as saying by local Cypriot media.
Samuel Rubenfeld contributed to this report.