Regal Assets Analytics

Saturday, April 13, 2024

    EU Repeals Citizenship By Investment Schemes

    EU Repeals Citizenship By Investment Schemes – The European Commission has told all member states to work towards repealing all citizenship- and residence by investment schemes this week , as they undermine EU-wide cooperation efforts.

    There have been at least 6,000 citizenships granted (around 5,000 of which were given to non-EU nationals) and 100,000 residence permits handed out through golden passport schemes.

    Such schemes “jeopardise the principle of sincere cooperation” and “have significantly increased the political, economic and security risks for European countries”, the Commission said.

    RELATED: Dominica Protective Of Its Citizenship By Investment

    The EU has long been critical of such initiatives, with the commissioner for justice, Vera Jourova, lamenting last year that “the EU must not become a safe haven for criminals”.

    Malta and Cyprus in the spotlight

    The Commission was particularly scathing of the schemes run by Malta and Cyprus, as they “pose a high risk to the integrity of [due diligence procedures]”.

    In fact, International Adviser reported earlier this year that Malta had given out some 700 citizenships by investment to Russian nationals, an issue that the EU is extremely concerned about.

    However, Edward Scicluna, the finance minister of Malta, told IA back in January: “We refuse, with a very strict due diligence, 25% of those who applied. We do not accept everybody.”

    Despite this, the Commission has urged member states to “phase out all existing citizenship by investment or residence by investment schemes as soon as possible”.

    In the meantime, the EU28 “should require physical presence in the country as a condition for benefiting from [the schemes]”, as this was not often required.

    Lack of transparency

    The decision was also a result of the lack of information related to the applicants of such schemes, the number of individuals granted citizenship or residence permits, the amount invested and the origin of that money.

    These concerns also sparked several formal investigations, both at national and European levels, on corruption and money laundering issues being possibly facilitated by golden passport schemes.

    Exploitation during COVID-19 Pandemic

    Justice commissioner Didier Reynders urged Bulgaria, Cyprus, and Malta to phase out these programmes, during a video-hearing of the committee on civil liberties, justice and home affairs (Libe).

    “EU citizenship is a collection of shared rights that all member states provide in solidarity,” Reynders said.

    “Together, member states create the conditions to enjoy EU citizenship. The Commission continues to monitor the developments in the three member states very closely, and it takes this occasion to re-iterate that this crisis [the covid-19 pandemic] and its impact must not be used as a reason to operate risky EU citizenship schemes.

    “On the contrary, I fear that the risk identified around these schemes can have a negative impact on other investments that will be key for the economic recovery of member states and the EU as a whole,” he added.

    National vs international concerns

    According to Maltese newspaper Times of Malta, the Commission recommended the three countries “phase out” the citizenship-by-investment schemes in its letter to the respective governments.

    Reynders acknowledged that the matter is of national concern; but it has serious repercussions, including money laundering and corruption risks, for the wider European Union.

    He added that the Commission was in talks with the three countries to assess the possible evolution of these programmes.

    This is not the first time the EU has targeted these investment schemes, as it urged member states to terminate them in March 2019; with commissioner for justice Vera Jourova deeming them a “security threat” in 2018.

    Latest figures by international citizenship- and-residence-by-investment advisory firm Henley & Partners show that, prior to covid-19 becoming a pandemic, there was a surge in applications for these investment schemes.

    Portugal, for instance, saw a 25% increase in interest in Q1 2020, with actual applications rising by 50% compared to the same period in 2019.


    In The News

    Related Articles