The Investigative Committee's interim report on the Gold Passport Case "revealed a series of illegal practices used by service providers to bypass the scheme's criteria.
In addition to pressure and / or interference from some service providers, they had in their arsenal ways to trick the system.
As it became known, the tricks used by the providers misled even the banks in Cyprus.
According to the testimony of the current head of the Central Bank, "in many cases, Local financial institutions have been misled by various tricks used by service providers and land development companies, which made it very difficult to identify suspicious transactions."
In particular, among the most popular tricks was splitting investments into smaller money transfers in order to avoid drawing the bank's attention to the investor, making a deposit to land development company accounts in order to exclude the option of opening an account in the investor's name and, accordingly, avoid their due diligence.
The TOP-8 of the most common methods (used by companies in an attempt to bypass the criteria of the Cyprus investment program) include:
1. Use of deposits as collateral for obtaining loans by investors for an appropriate amount. Finance Minister Constantinos Petrides told the Commission that there were such abuses "to such an extent that they can safely be classified as fraudulent." An investor could put €5 million in a bank account and at the same time apply for a loan secured by a deposit, and then send the money back to the country of which they were a citizen.
In essence, the intermediary was simply paid the difference in percentage, and the applicant received a passport, Petrides said.
2. Submission of an application for naturalization by a spouse. In particular, the person applied for naturalization, but in fact was not the real owner of the property. This usually happened due to the fact that the real investor was convicted of offenses and could be subject to additional verification by the relevant services.
3. Selling the same property to several investors.
4. The fourth trick concerns returning money to investors. At the same time, the Commission notes that the one who had to pay the money for management was the buyer for the seller, and not vice versa. There is even mention of a land development company that "seems to be involved in all possible attempts to defraud the state."
5. False or misleading statements. It turned out that service providers knew in some cases that their clients did not meet the program criteria, but still filed applications that did not reflect the true picture of the situation for consideration by the state authorities.
6. Illegal use of client accounts. In particular, it was found that in some cases, investors continued to transfer money to the accounts of service providers in lieu of their own companies, which would move on to the corresponding investment or purchase of permanent residence, or to the seller of the investment or residence. The Commission notes that this could have been done in order to avoid control of their source of income by the banking institution.
7. Misleading advertising used by service providers to attract investors. According to the Commission, the government (through Interior Minister Socrates Hasikos) tried to curb the phenomenon of misleading advertising by introducing a code of conduct in 2018. In reality, however, it was reported that "no one controlled how the service providers and their various partners around the world presented the investment program and what they promised to potential investors."
8. The latest bad practice on the part of providers concerns the phenomenon when providers' employees declare themselves to be “guarantors” of applicants for exclusive naturalization. In a significant number of files, the persons who signed up as “guarantors” had the same address as the Service Provider, “violating the specifications of the application. And the Ministry of Internal Affairs could know it”. According to the Commission, the explanation for this seems to lie in the fact that most investors did not have real close ties with Cyprus and therefore it was difficult to find people to guarantee the integrity of the investors.
Chronicles of the Cyprus Passport Saga:
- Part 1 (link)
- Part 2 (link)
- Part 3 (link)
- Part 4 (link)
- Part 5 (link)
- Part 6 (link)
- Part 7 (link)
- Part 8 (link)
- Part 9 (link)
- Part 10 (link)
- Part 11 (link)
- Part 12 (link)
- Part 13 (link)
- Part 14 (link)
- Part 15 (link)
- Part 16 (link)
- Part 17 (link)
- Part 18 (link)
- Part 19 (link)
- Part 20 (link)
- Part 21 (link)