Nicola Sharp of financial crime solicitors Rahman Ravelli outlines the background to the problem and the EU's approach to such risks.
A European money laundering watchdog has warned that Cyprus' "golden passports'' scheme poses a major money laundering risk.
The investment-for-passports programme, which began in 2013, led to more than 3,000 people gaining Cypriot citizenship. Under the programme, a minimum two million euro investment could obtain a Cypriot passport, which offers free movement through the European Union. A total of 6.64 billion euros was invested via the programme between 2013 and 2018.
But the programme has led to concerns being voiced by MONEYVAL, the permanent monitoring body of the Council of Europe entrusted with assessing compliance with international standards to counter money laundering.
In its report, MONEYVAL states that although Cyprus has implemented some measures to reduce money laundering risks, there remains a significant risk of money laundering in the passports programme via investment in real estate. The report says that these risks have not been properly mitigated or assessed and that Cyprus was not very proactive in freezing and confiscating the proceeds of crime.
MONEYVAL decided to apply an enhanced follow-up procedure and has invited Cyprus to report back...