Cyprus’ tarnished passports-for-cash scheme to attract investors operated with minimal oversight and thousands of passports were issued illegally, the head of an inquiry said on Monday.

Former supreme court judge Myron Nikolatos said there was "criminal and political" responsibility because rules had been broken.

An attorney general-appointed commission of inquiry was set up last September to investigate the so-called "golden passports" issued between 2007 and August 2020, before the scheme was scrapped in November.

"It is obvious the Cyprus Investment Programme was operating between 2007 and 2020 with gaps and deficiencies, an inadequate legislative framework and almost no regulatory framework," Nikolatos told reporters.

The inquiry's damning report said 53 per cent of the 6,779 passports issued were granted illegally, because of a due diligence vacuum or insufficient background checks.

The cabinet had the final say on approving each passport application by a wealthy investor.

Later on Monday, government spokesperson Kyriacos Koushous said the administration was determined to "punish" those responsible.

The completion of the report "closes, or should close, a prolonged cycle of political tension and toxic climate, which primarily targeted the president (Nicos Anastasiades) and his government," he said.

The Mediterranean island dropped the passport scheme after Al Jazeera aired a documentary showing reporters posing as fixers for a Chinese businessman seeking a Cyprus passport despite having a criminal record.

Parliament speaker Demetris Syllouris and an opposition MP were secretly filmed allegedly trying to facilitate a passport for the fugitive investor.

They later resigned, although both insisted they were innocent of any wrongdoing.

Al Jazeera said dozens of those who applied were under criminal investigation, international sanctions or even serving prison sentences.

Nicosia had long faced pressure from Brussels to reform the scheme over concerns it may have helped organised crime gangs infiltrate the European Union.

EU member Cyprus had argued it needed the investment following the island’s 2013 economic meltdown.

Nicosia allowed investors to acquire a passport in exchange for an investment of €2.5 million, netting a total of over seven billion euros for the state.

Money laundering allegations also dogged the programme.