Cyprus scraps controversial ‘cash for passports’ scheme after undercover probe exposes alleged abuses

Citizenship programme aimed at wealthy investors cancelled after seven years and more than €7bn

A lone person swims through the clear waters of ‘Konnos’ beach in Ayia Napa, Cyprus. Cyprus government spokesman Kyriakos Koushos said that the Cabinet accepted a recommendation by the minsters of the interior and finance to cancel altogether the ‘golden passport’ programme (AP)

Cyprus has scrapped a controversial citizenship scheme which guaranteed the right to travel across the EU for wealthy individuals willing to invest €2m (£1.8m) in property in the country.

The move to end the “golden passport” programme, which will be enacted next month, comes amid allegations senior political figures attempted to issue a passport to a fictitious Chinese businessman with a supposed criminal record.

On Tuesday, the Cypriot government’s cabinet accepted a recommendation by the finance and interior ministers to cancel the scheme, which has attracted investments worth more than €7bn since it was started in 2013.

Applicants for citizenship do not have to live in – or even visit – Cyprus to get the passport, and once secured the travel document gives the holder the freedom to live, work and study in all 27 EU member states.

Under the terms of the scheme, there is no language requirement or interview required and permanent residency can be acquired with an investment of just €300,000.

Claims of wrongdoing emerged in an undercover report by Al Jazeera that used hidden cameras to allegedly show parliamentary speaker Demetris Syllouris and politician Christakis Giovanis pledging "full support" to granting a passport to a fictitious Chinese investor, despite a money laundering conviction against him.

Both Mr Pittadjis and Mr Giovanis have strongly denied the allegations. They said they were fully aware that the approach was bogus and that they only played along to extract more information from the "representative" in order to file a report with Cypriot law enforcement authorities.

Mr Syllouris also said he would step back from his parliamentary duties next week until an investigation is completed.

European Commission spokesman Christian Wigand said the bloc's executive body would consider possible infringement proceedings against Cyprus.

"We watched in disbelief how high-level officials were trading European citizenship for financial gains," Mr Wigand said.

The scheme, which is reportedly popular with Russians, Ukrainians, Chinese and Cambodians, has long been criticised as open to the risk of money-laundering.

In September, Cyprus’s audit office said there were potentially thousands of passports that could have been granted without proper authorisation.

Last year an investigation by Reuters found that past donors to the Conservative party had applied for citizenship to Cyprus using the golden passport scheme since the UK voted to leave the EU in 2016.

Cyprus is not alone in attempting to woo wealthy individuals by promising citizenship in return for a substantial investment.

Malta has an “Individual Investor Programme” which offers citizenship in return for a €650,000 contribution to the government, an investment of €150,000 in government-chosen assets and five years of residence.

Similar schemes exist in countries ranging from Panama to Malaysia.