Central bank looks into unusual transactions under ‘golden visa’ scheme
Greece’s central bank is investigating a series of unusual transactions by Chinese citizens who used their credit cards to buy property in Athens and join the EU country’s flourishing “golden visa” scheme. The credit card purchases were made through two leading Greek banks, National Bank of Greece and Eurobank, a central bank official said. The deals were arranged by an Athens-based real estate company, Destiny Investment Group, that offered apartments and villas in the Greek capital to overseas buyers with a starting price of €250,000 — the minimum property investment required under the visa programme. The golden visa scheme was introduced in 2013 at the height of Greece’s financial crisis in a bid to increase tax revenues and stem a sharp fall in property prices. The probe comes as the cash-strapped Syriza government debates whether to extend the scheme to other investments such as Greek sovereign bonds and companies listed on the Athens stock exchange. A senior banking official said more than 250 property transactions were made by Chinese buyers using credit cards, “potentially violating Chinese regulations on capital movement and Greek law on issuing golden visas”. “This is not a trivial matter but the investigation will determine whether any illegal actions have taken place,” the same official said. More than 9,000 non-EU citizens and their close relatives were given renewable five-year residence permits in the first nine months of this year, compared with 6,200 in the whole of 2017. Half the visas issued this year went to Chinese citizens, according to the Greek ministry for migration. Several southern EU member states operate golden visa schemes, among them Spain, Cyprus and Portugal which all require non-EU citizens to invest more than €300,000 to qualify for a residency permit. Destiny acquired credit card terminals with roaming capacity from the two banks to be used by Chinese buyers for property purchases in Greece. The company sent several terminals to Beijing to facilitate such transactions, according to the senior banking official. Evangelos Papaevangelou, a prominent Athens businessman and founder of Destiny, has denied any wrongdoing. In a statement, Mr Papaevangelou said the transactions were legitimate on the grounds they had been approved by the banks that owned the terminals and by the institutions that issued the cards. Destiny stopped the transactions in September after a request by National Bank. Chinese property investors are now required to make a purchase by transferring funds through a bank to a Greek lawyer and notary acting on their behalf.
Last year China UnionPay, the Chinese state-owned bank card network, explicitly banned the use of its credit and debit cards for property purchases. Analysts in China said a significant portion of Chinese foreign spending classified in official data as overseas consumption is actually disguised capital flight, including investment in property. A Eurobank official said “only a small number” of unusual transactions took place before its internal monitoring system triggered checks by compliance officers. Eurobank asked Destiny in May to stop using its terminals for Chinese property transactions. Greece’s supreme court has ordered the anti-corruption prosecutor to carry out a separate probe of the transactions to determine whether any money-laundering has taken place. Most applicants for golden visas are middle-class Chinese investors taking advantage of a boom in tourism to Athens to buy properties that can generate income as short-term holiday rentals, according to local real estate companies. The visa law specifies that purchases can only be made through bank transfers or cheques. “We’re not catering for the Chinese super-rich, our investors are prosperous middle-class city dwellers who want a European base from which they can travel to western Europe on their golden visa,” said the owner of a small Athens real estate company who declined to be identified. “For €250,000 they can buy a three-room apartment with a view of the Acropolis or the Aegean Sea. They see it as an attractive opportunity.”
Additional reporting by Gabriel Wildau in Shanghai
Kerin Hope – ft.com