On Wednesday 23 January, the European Commission presented its report on Investor citizenship and residence schemes, often referred to as ‘golden visas’, which enable third-country nationals to quickly obtain a residence permit or the nationality of a Member State in return for a substantial personal investment in the host country.
“We speak about opening golden gates to Europe to some privileged people who have the money to pay for citizenship or residence”, the European Commissioner for Justice, Věra Jourová, told the press.
The report identifies existing practices in the EU and identifies the risks involved in these schemes, in terms of security, money laundering, tax evasion and corruption. The list is long.
But it also constitutes, Commissioner Jourová recalls, a “first official reaction”, of the Commission to the proliferation of these schemes and sets out what it expects from the Member States.
Bulgaria, Cyprus and Malta in the spotlight
The Bulgarian, Cypriot and Maltese schemes, countries in which investors are required to invest between €800,000 and €2 million to obtain citizenship, are analysed in detail in the report. None of the three countries imposes on these investors a physical residency requirement or a genuine link to the country, he points out.
The Commission justifies this particular attention by the fact that these three countries are the only ones with such schemes, while 17 others have Investor residence schemes, which also present risks.
"I invested my time and energy to understand the Maltese and Cypriot systems. I got a lot of information from the authorities, but still I have to say that some of the concerns remain”, said Věra Jourová. Bulgaria is reported to have received less attention as it plans to discontinue this type of scheme, she said.
It is not a question of "pointing the finger" at certain countries, assured the European Commissioner for Citizenship, Dimitris Avramopoulos, but of “sending a strong signal”.
The reactions of both countries were not long in coming. In a statement, the Maltese government indicated that it disagreed with several of the report's conclusions. “Malta is one of the few jurisdictions where physical presence is mandatory and a residence status is required for a minimum of twelve months”, the government says. The country also has one of the highest rejection rates for applications, averaging 25%.
Cypriot President Nicos Anastasiades accused the EU of applying double standards and recalled that Cyprus had also put in place very strict criteria. In November, in an exclusive interview with EUROPE, the government spokesman, Prodromos Prodromou, had already denounced the particular attention paid to small EU countries in terms of investment (see EUROPE 12157).
Establishment of a group of experts
What does the Commission propose? “We, as the European Union, do not have the legal possibility to ban these schemes, but we cannot do nothing”, said Věra Jourová.
The Commission therefore calls on Member States to strengthen their security controls and to verify that the funds paid by applicants to these schemes comply with EU anti-money laundering rules.
“When a country sells the citizenship, the country sells the EU citizenship [...] That’s why we are absolutely convinced that other Member States, the whole EU, has a say to it”, the Commissioner continued.
The Commission will set up a group of experts from the Member States to examine the specific risks posed by these schemes. It will also be responsible for setting up procedures for exchanging information and statistics. The group will also be mandated to develop, by the end of the year, a “common set of security controls” to be applied to these schemes.
A warning from Mr. Avramopoulos: "We will closely monitor compliance with EU law and we will take necessary actions as appropriate”.
“The tide is turning on the golden visa industry”, said the NGOs Global Witness and Transparency International, which are very active on the subject (see EUROPE 12114). Nevertheless, they deplored the fact that the report merely sounded the alarm without proposing any concrete solutions. For them, Member States should suspend their schemes until it is clear that they do not jeopardise EU security.
See the report: https://bit.ly/2WkRn5E. (Original version in French by Marion Fontana)