After criticism of the scheme applicants will be subjected to more rigorous vetting process

Cyprus has sought to curb criticism of its golden visa scheme, saying it will tighten vetting procedures for investors determined to acquire European citizenship.

With disapproval of the controversial cash-for-citizenship programme on the rise, the island announced that security checks would be stepped up. Under the renamed “Cypriot investment scheme” the number of passports granted would be capped at 700.

“A limit has been put in place and a new code of conduct adopted to send the message that this is not an industry,” the government spokesman Prodromos Prodromou said. “We’re not hiding that some cases were maybe problematic and needed further research internationally. It is not easy to trace the activity of everyone around the world.”

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The Mediterranean outpost has faced mounting criticism over a scheme that has allowed the wealthy to obtain citizenship if they invest at least €2m in real estate, stocks, government bonds or Cypriot businesses. Rich Russians accounted for most of the recipients of the estimated 1,013 passports handed out to investors, and respective family members, in 2017.

In addition to billionaire oligarchs, Ukrainian elites accused of corruption have also been among beneficiaries of a scheme criticised for serving the super-rich.

Initiated in 2013 on the back of the banking crisis that spurred the island’s near-economic collapse, the programme has met with unexpected success, generating over €4bn in revenues for Greek Cypriot state coffers.

Under the new rules, applicants will be subjected to a process of enhanced due diligence. International agencies specialised in money laundering will also be deployed to examine requests under a procedure expected to take much longer than the initial three months.

“There will be a much more organised department to handle applications,” Prodromou insisted, in an interview from Nicosia, Cyprus’s war-partitioned capital. “Advertising of the scheme by private law and accountancy firms is over. From now on, it will all be done through the proper channels.”

This week, the island’s finance minister, Harris Georgiades, also conceded there were “weaknesses” in the system. But he dismissed charges that Cyprus had become the weak link in a system that has seen the golden visa market being transformed into a multibillion-euro global phenomenon.

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“We reject the notion that the Cyprus passport is up for sale,” he told the state radio station RIK. “We don’t depend on this scheme but it’s a useful complement to the tools we have to stimulate economic development.”

The island is not alone in coming under fire for a programme that EU officials contend has been open to rampant abuse. Other EU states including Austria, Hungary, Portugal and Malta have also been accused of applying insufficient integrity checks.

Freedom of movement is a major selling point for investors enticed, in the case of Cyprus, by visa-free access to 163 destinations. Access to the EU’s single market, legal service and social services are other draws.

While the island had decided to apply stricter criteria, the government spokesman said that much of the criticism had also been unfair.

“In 2013 there were bank depositors who lost tens and sometimes hundreds of millions of euros when we were forced to cut [deposits] in exchange for [bailout] loans,” he said.

“At that moment, when no one was interested in investing in Cyprus, granting citizenship was seen as a gesture, compensation for those who had suffered such losses and, yes, many were Russian. The idea was never to sell citizenship. In many ways the criticism has been unfair.”