Greek Authorities Investigate Alleged Golden Visa Scam  

Moustafa Daly
Cairo

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The Greek Anti-Money Laundering Authority has launched a wide-ranging investigation into the country’s Golden Visa program following alarming reports from Chinese authorities of an active pyramid scheme.

Charalambos Vourliotis, honorary Supreme Court prosecutor and head of the Authority, leads the probe and targets criminal networks conducting dubious real estate transactions under the Golden Visa umbrella.

According to local media, the Anti-Money Laundering Authority seized two properties belonging to Chinese nationals in Attica. This happened after authorities found evidence linking the owners to a pyramid scheme in China centered around Greek real estate and golden visa investments.

How it works

The alleged scam operates through a network of real estate companies, often including at least one Chinese partner. These entities collaborate with law firms, Chinese agencies, and other intermediaries, earning substantial commissions from buyers seeking Golden Visas. They typically target areas like Piraeus and western suburbs, where the Golden Visa threshold was previously €250,000 but can now reach €800,000 depending on the property.

The alleged scam’s modus operandi involves a series of deceptive practices:

1. Intermediaries approach property sellers, promising higher prices for their properties.
2. Agents then convince the buyers to agree to contracts stating a higher price than what the property is actually worth.
3. Victims buy properties for as low as €100,000 at inflated prices, often more than double the actual value.
4. The developer officially lists the properties’ sale value at €250,000, while the real price is only €100,000.
5. Investors pay taxes on the €250,000 figure.
6. Property sellers return the difference between the sale price and the contract value (approximately €150,000 in this example) and split it among Greek and foreign intermediaries.

The scheme allows property sellers to receive money, Chinese buyers to secure residency permits, and intermediaries to pocket hefty commissions. The Authority’s investigations reveal, however, that things don’t always go as planned, and the Chinese buyers often bear the losses.

Alexander Varnavas, managing partner of Varnavas law firm, cautions that “scams like this one happen in real estate deals all over the world, and their link to the Golden Visa program is coincidental.” He points out that anyone can “trick potential buyers” by taking deposits and then not following through with their responsibilities to complete the transaction.

Reports indicate that numerous unsuspecting Chinese individuals have fallen victim to the scam. They claim that investors paid deposits for properties that developers never delivered. Chinese authorities have even reported that some victims have committed suicide.

How other investors can avoid these scams

Varnavas emphasized the importance of due diligence to avoid such fraudulent activities. He recommends investors “start the process by involving an independent law firm, regulated by the local Bar Association, even before starting to look for a property, and allowing them to represent you properly in each and every step.”

He adds that a common mistake is that many investors choose to work with professionals who are in cahoots with the sellers or the agents, as they are often more affordable than independent law firms. These professionals have a “de facto conflict of interest,” as sellers recommend them due to their close connection with the seller or the agent.

The Greek Golden Visa program has otherwise had a great run. Between 2018 and July 2024, investors submitted 33,544 Golden Visa applications, and the government approved 21,086 of those applications so far.

Chinese citizens lead the charge in terms of application numbers, accounting for 56% of all permits. Turks followed in second place (7.6%), Lebanese in third (5.5%), and British in fourth (3.7%).

As the investigation unfolds, authorities are expanding their scope to examine the source of funds used in property acquisitions under the Golden Visa program. The investigation has revealed that the government has not scrutinized the origin of funds used to acquire these properties, raising concerns about potential money laundering activities.

The Anti-Money Laundering Authority plans to expand its investigation into all real estate purchases under the Golden Visa program, potentially leading to more property seizures and legal actions.