Cypriot authorities have long spoken of their intentions to regulate the country’s citizenship by investment program, particularly with regards to how it’s marketed abroad. Today, for the first time, Investment Migration Insider can offer a detailed preview into the changes, which are slated to come into effect sometime during the next two months, and in any case not until after the presidential election scheduled for this Sunday.
Investment Migration Insider has been informed that the changes will come into effect regardless of the electoral outcome, as no approval by parliament is needed.
The implications for the Cyprus CIP market are significant. Notably, real estate developers may no longer promote the CIP, nor provide services in relation to it. Promoting the CIP “in public places, the media or on the internet” has also been prohibited.
A source intimately familiar with the process has informed the editor that Cabinet on January 9th gave final approval to the changes to the Cyprus CIP, detailed in full below.
The Cabinet Decision provides that all applications for the Cyprus CIP must be submitted by a Registered Service Provider. Service providers must abide by the Code of Practice (The Code) and all applicants must submit a signed, legalised Declaration (The Declaration) by which they will confirm that their service provider abode by the Code, that they have received full advice and that they are aware of the consequences of not adhering to the provisions of the Cy CIP. More particularly:
- The Decision provides for the establishment of a Committee of Supervision and Control of matters relating to the CIP.
- This committee will create a Register with the names of service providers of services relating to the CIP.
- A draft of a Code of Practice (The Code) has been approved. This Code states the rules relating to the promotion of the CIP and the rules registered service providers must abide by.
- The applicant must submit with his application a signed and duly legalized Declaration.
- The service provider must also submit a Declaration stating essentially that he/she has provided full advisory services and that he/she has informed the client on the provisions and requirements of the CIP and the Code.
Committee on Supervision and Control
This Committee will invite applications by service providers. It will then compile a Register of Service Providers listing successful applicants. Eligible applicants will be those who satisfy the Committee that they are providing such services and have a satisfactory command of the provisions and process of the CIP. Applicants can be legal entities or natural persons and must have a clean criminal record.
The register will include all registered/licensed service providers. All applications under the CIP must be made by registered service providers only. Offenders will be stricken off the Register.
The Code of Practice
The Code makes several provisions the main of which are as follows:
- Service providers cannot have a conflict of interest. Thus, developers cannot either promote the CIP or provide services in relation to it. Service providers cannot have a financial interest in investment products including property.
- Service providers must adhere to the provisions of the CIP and the required investment thresholds and officially declare that these have been adhered to by each of their clients. They must also supply clients with a list of qualified property valuers.
- Service providers and their associates including property developers they will be introducing to clients must abide by the rules relating to the promotion of the CIP.
- The promotion of the CIP cannot be made in public places, the media or the internet unless such advertisements are approved by the Committee. Advertisements must not include photos of the passport nor state or imply that passports are being sold.
- Service providers will not cooperate with developers who do not adhere to the rules of promotion as per the Code.
- Service providers must carry out DD and KYC for their clients and their funds and secure a written Engagement from their clients.
- Service providers must be able to provide full advisory services to their clients as they relate to the CIP, property and other investments either on their own or through their specialist associates.
- Provisions are included relating to ethics, transparency, confidentiality, integrity and for acting in a manner which upholds the good name of the CIP and of Cyprus.
- Offenders will be named-and-shamed and will be stricken off the Register.
Declaration by applicants
Each applicant is required to submit a duly signed and legalized Declaration with his application stating the following:
i. That his service provider has provided him with full advice relating to the CIP and the provisions of the Code. He will confirm that his service provider abode by the Code.
ii. That the service provider has provided him with advice relating to the selected investments either on his own or through associates.
iii. That he has adhered to the provisions of the CIP relating to investments and their thresholds and that he understands that non-adherence to these and the provisions of the CIP can lead to loss of his citizenship without the possibility of restitution and that he understands that non-adherence to the foregoing is a criminal offense.
iv. That he has engaged the service provider to submit annual reports relating to the state of affairs of his investments as will be required by the Government