How The EU Is Cracking Down On Golden Passports And Targeting Money Laundering

President Putin meets with representatives of Russian business community
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In his book MoneyLand: Why Thieves And Crooks Now Rule The World And How To Take It Back, financial journalist Oliver Bullough talks about Moneyland as, “a legal construct that is divorced from any place on the map.” He says that money in Moneyland, “isn’t just drug money, or stolen money, or bribes” but includes “money, which has dodged taxes, regulations, and been stashed offshore to avoid detection.” He adds, there is also money shipped out of countries like Russia, China or Venezuela just to avoid it being seized by governments. The International Monetary Fund estimates such illicit financial flows could amount to as much as $2.6 trillion annually. This tidal wave of insidious ‘flight capital’ is sloshing around worldwide looking for safe havens.

One such safe haven has been Cyprus that provides a “citizenship for investment” program to wealthy individuals who are non-E.U. citizens where they can “buy” a passport by investing €2 million in the island’s economy. The fast track procedure to obtain a so-called “golden passport” takes three months and has no residency requirement. What is more, the applicant and his family gain free entry to the European Union, access to the best education and health care institutions and are subject to low taxation. Most importantly, they secure an escape hatch for themselves to avoid political instability back in their home country should it arise.

Recently, however, the Cypriot government has initiated a process of revocation of citizenship in cases where an “audit reveals that a person or a member of his family has been accused of any crimes, or are the objects of European or international sanctions.” Following this process, according to a report in The Telegraph, Oleg Deripaska, a billionaire who became one of the 10 wealthiest people in Russia a few years ago and came under personal U.S. sanctions last year, has  been stripped of his Cypriot citizenship. According to a report in Vedomosti citing Cypriot sources, in addition to Deripaska, other rejectees include Vladimir Stolyarenko and Alexander Bondarenko, former senior managers of the Russian-Venezuelan Evrofinans Mosnarbank, as well as their family members.

Cypriot Interior Minister Konstantinos Petridis has indicated that, “the process of revocation of citizenship will be initiated in all cases when the audit reveals that a person or a member of his family has been accused of any crimes, or are the objects of European or international sanctions.” Even offenses committed after the passports were obtained can constitute a reason for revocation of citizenship, he added.

According to the Moscow Times, an independent newspaper published in Moscow, alongside Deripaska, another person who could be on his way out under this new policy is billionaire Viktor Vekselberg (11th on Forbes’ list of wealthiest Russians with $11.5 billion), a current citizen of Cyprus since 2017 but who also came under U.S. sanctions last year. The Moscow Times indicates that with a total wealth of $15 billion, Vekselberg and Deripaska are only “the tip of the iceberg of Russian money in Cyprus.” It appears there is a growing exodus of such Russian investors leaving Cyprus in response to the anti-money laundering rules.

The new clean up policy has been initiated to fall in step with EU initiatives. “Criminals are endangering Europe’s security or want to engage in money-laundering here,” said EU Justice Commissioner Vera Jourova late last year. "We do not want Trojan horses in the Union," Jourova added. "Some Member States need to do more to ensure that citizenship is not given to criminals who endanger or threaten to launder the security of Europe." She says more prudence must be exercised in issuing golden passports in exchange for investments and buying property, “because the EU does not want to become a refuge for corruption and dirty money.” In short, things seem to be getting a little rough for those who are part of Moneyland.

That said, the game is not quite over. The United States has reason to be concerned about money laundering given news reports about President Trump using his real estate empire to help Russians launder their money. This country could learn a lot from Britain in terms of how things are done in Moneyland. Britain has been particularly targeted by rich Russians who want to launder their reputations according to Bullough. “They start by buying property, somewhere large and impressive where they can host expensive dinners for important people.” They hire PR agencies to connect them with the rich and powerful by choosing to support something uncontroversial, such as educating children, promoting cultural understanding or advancing sports. In this manner, the rich foreigner seeks to insinuate himself into elite social circles by resorting to measures such as investing in endowments connected to prestigious universities, holding lavish parties on their yachts, and paying for influencers to take excursions to foreign lands. Rising in profile in these ways, they make themselves safe from attack and become “un-write-about-able.” Strong defamation laws enable such rogues to shut down any discussion of their origin of funds using the useful tool of a cease and desist letter from a London solicitor and libel specialist. The experience of Bill Browder detailed in his book Red Notice is instructive in this regard. While he won an anti-defamation law suit filed against him, he was nonetheless subjected to a ceaseless wave of legal assaults ultimately resulting in a loss of some £660,000 while successfully defending himself. His experience attests to the harassing and extortion strategy employed by these Russians against those who come after them.

Meanwhile Cyprus is not the only country dealing with this problem. According to Der Spiegel, other countries that have come under the EU’s scrutiny are Greece and Malta, which actively trade in passports, their primary clients being Russians and citizens of former Soviet republics. These developments suggest that the sanctions imposed by the U.S. against Russia are slowly working and taking a toll on those who deserve to be punished. However, the United States also needs to protect itself and beware of the flow of uncontrolled foreign money and the power illicit money has to spread instability and undermine American institutions. That is why Congressional action in the area of more integrity related to investor immigration is needed.

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In his book MoneyLand: Why Thieves And Crooks Now Rule The World And How To Take It Back, financial journalist Oliver Bullough talks about Moneyland as, “a legal construct that is divorced from any place on the map.” He says that money in Moneyland, “isn’t just drug money, or stolen money, or bribes” but includes “money, which has dodged taxes, regulations, and been stashed offshore to avoid detection.” He adds, there is also money shipped out of countries like Russia, China or Venezuela just to avoid it being seized by governments. The International Monetary Fund estimates such illicit financial flows could amount to as much as $2.6 trillion annually. This tidal wave of insidious ‘flight capital’ is sloshing around worldwide looking for safe havens.

One such safe haven has been Cyprus that provides a “citizenship for investment” program to wealthy individuals who are non-E.U. citizens where they can “buy” a passport by investing €2 million in the island’s economy. The fast track procedure to obtain a so-called “golden passport” takes three months and has no residency requirement. What is more, the applicant and his family gain free entry to the European Union, access to the best education and health care institutions and are subject to low taxation. Most importantly, they secure an escape hatch for themselves to avoid political instability back in their home country should it arise.

Recently, however, the Cypriot government has initiated a process of revocation of citizenship in cases where an “audit reveals that a person or a member of his family has been accused of any crimes, or are the objects of European or international sanctions.” Following this process, according to a report in The Telegraph, Oleg Deripaska, a billionaire who became one of the 10 wealthiest people in Russia a few years ago and came under personal U.S. sanctions last year, has  been stripped of his Cypriot citizenship. According to a report in Vedomosti citing Cypriot sources, in addition to Deripaska, other rejectees include Vladimir Stolyarenko and Alexander Bondarenko, former senior managers of the Russian-Venezuelan Evrofinans Mosnarbank, as well as their family members.

Cypriot Interior Minister Konstantinos Petridis has indicated that, “the process of revocation of citizenship will be initiated in all cases when the audit reveals that a person or a member of his family has been accused of any crimes, or are the objects of European or international sanctions.” Even offenses committed after the passports were obtained can constitute a reason for revocation of citizenship, he added.

According to the Moscow Times, an independent newspaper published in Moscow, alongside Deripaska, another person who could be on his way out under this new policy is billionaire Viktor Vekselberg (11th on Forbes’ list of wealthiest Russians with $11.5 billion), a current citizen of Cyprus since 2017 but who also came under U.S. sanctions last year. The Moscow Times indicates that with a total wealth of $15 billion, Vekselberg and Deripaska are only “the tip of the iceberg of Russian money in Cyprus.” It appears there is a growing exodus of such Russian investors leaving Cyprus in response to the anti-money laundering rules.

The new clean up policy has been initiated to fall in step with EU initiatives. “Criminals are endangering Europe’s security or want to engage in money-laundering here,” said EU Justice Commissioner Vera Jourova late last year. "We do not want Trojan horses in the Union," Jourova added. "Some Member States need to do more to ensure that citizenship is not given to criminals who endanger or threaten to launder the security of Europe." She says more prudence must be exercised in issuing golden passports in exchange for investments and buying property, “because the EU does not want to become a refuge for corruption and dirty money.” In short, things seem to be getting a little rough for those who are part of Moneyland.

That said, the game is not quite over. The United States has reason to be concerned about money laundering given news reports about President Trump using his real estate empire to help Russians launder their money. This country could learn a lot from Britain in terms of how things are done in Moneyland. Britain has been particularly targeted by rich Russians who want to launder their reputations according to Bullough. “They start by buying property, somewhere large and impressive where they can host expensive dinners for important people.” They hire PR agencies to connect them with the rich and powerful by choosing to support something uncontroversial, such as educating children, promoting cultural understanding or advancing sports. In this manner, the rich foreigner seeks to insinuate himself into elite social circles by resorting to measures such as investing in endowments connected to prestigious universities, holding lavish parties on their yachts, and paying for influencers to take excursions to foreign lands. Rising in profile in these ways, they make themselves safe from attack and become “un-write-about-able.” Strong defamation laws enable such rogues to shut down any discussion of their origin of funds using the useful tool of a cease and desist letter from a London solicitor and libel specialist. The experience of Bill Browder detailed in his book Red Notice is instructive in this regard. While he won an anti-defamation law suit filed against him, he was nonetheless subjected to a ceaseless wave of legal assaults ultimately resulting in a loss of some £660,000 while successfully defending himself. His experience attests to the harassing and extortion strategy employed by these Russians against those who come after them.

Meanwhile Cyprus is not the only country dealing with this problem. According to Der Spiegel, other countries that have come under the EU’s scrutiny are Greece and Malta, which actively trade in passports, their primary clients being Russians and citizens of former Soviet republics. These developments suggest that the sanctions imposed by the U.S. against Russia are slowly working and taking a toll on those who deserve to be punished. However, the United States also needs to protect itself and beware of the flow of uncontrolled foreign money and the power illicit money has to spread instability and undermine American institutions. That is why Congressional action in the area of more integrity related to investor immigration is needed.

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I am a U.S. and Canadian Immigration attorney and have helped over 10,000 clients with various legal problems. I am a member of the New York and California Bar’s in the

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