Tough talk from the European Commission has not been followed up by concrete EU legislation nor legal action to eliminate the risks posed by golden passports and golden visas.
Over the past decade, the EU has witnessed a growth in the number of citizenship-by-investment (CBI) and residence-by-investment (RBI) schemes. Golden passports and golden visas, as these schemes are informally known, offer fast-track citizenship and/or residence to foreign nationals in exchange for their substantial investment.
Previous research from Global Witness and Transparency International has highlighted the lack of transparency, insufficient due diligence and weak governance of these schemes, exposing the whole of the EU to significant money laundering, tax evasion and corruption risks, as well as threatening its security.
Since then, the EU’s golden passport and visa programmes have been scrutinised and found to be inherently risky. However, actions so far taken by the European Commission and individual Member States fall short of effectively addressing the risks created by selling EU citizenship and residence.
We examined the main efforts taken in the past year to tighten and regulate EU golden passport and visa schemes at the EU level, and by the three Member States: Cyprus, Malta and Portugal. According to our research, these three states operate the most vulnerable schemes, and yet have made little to no actual progress despite high-profile scandals involving suspicious individuals entering the EU through these countries.
- Despite efforts in early 2019 by the European Commission to raise the awareness of the risks, and the European Parliament’s calls for a phase-out of all existing EU schemes, the EU golden passport and visas industry is still going strong.
- No Member State has ended its investor citizenship or investor residence schemes – in fact, some have hit new highs in terms of the number of applications approved.
- Measures that have been proposed and taken by EU institutions fall short of addressing the level of risk that the Commission itself identified as being associated with these schemes.
- Serious concerns remain over changes Cyprus introduced to its scheme being only a tokenistic response to public scandals.
- Malta has failed to introduce any changes to address money laundering and corruption risks associated with its scheme.
- Proposed reforms in Portugal, which have been delayed until 2021, concentrate only on dissuading investment into the local property market, rather than reducing money laundering risks.
- The European Commission should propose legally binding EU rules to ensure the phasing out of golden passport and visa schemes as part of a new, comprehensive approach to fighting money laundering and the financing of terrorist activities.
- The EU Member States and the European Parliament should support the adoption of legally binding EU requirements to ensure the phase-out of EU golden passport and visa schemes.
- The European Commission should, without delay, initiate enforcement actions against Member States offering golden passport and visa schemes that contravene existing EU law and undermine the principle of sincere cooperation and the collective security of EU nations.
- Member States should put in place measures to rigorously review all citizenships and residence permits granted through golden passport and visa schemes, to ensure that none have been granted to individuals associated with money laundering or terrorism finance. For any that are found to have these risks, Member States should ensure their citizenship and rights to residence are immediately revoked.
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