EU warns of risks in investor passport and visa schemes

Brussels – The European Commission has taken aim at some member states’ policies that grant citizenship and residency permits to non-EU investors.

Golden passport

These policies can be lucrative, but they pose risks related to security, money laundering, tax evasion and corruption, a commission report notes.

“A lack of transparency in how the schemes are operated” worsens these risks, it said.

“People obtaining an EU nationality must have a genuine connection to the member state concerned,” said EU Justice Commissioner Vera Jourova. “There should be no weak link in the EU, where people could shop around for the most lenient scheme.”

At present, each member state sets its own regulations for the “golden passport,” which lets holders travel freely in the European Union.

But in three – Bulgaria, Cyprus and Malta – there are no requirements for physical residence or “genuine connections” to those countries for investors seeking citizenship, the report notes.

ِِAddressing the weaknesses

As for residency permits – which also allow visa holders to travel within the bloc – 20 of the EU’s 28 member states have only minimal domicile requirements. Yet there is insufficient information and transparency on how and to whom these visas are allocated, the report says.

To address these weaknesses, the commission plans to set up a task force to promote better information sharing about applicants and establish a common system of security checks by year end.

The commission will also monitor member states’ compliance with EU law, especially in regard to border and security checks, money laundering and tax evasion.

In addition, the commission will apply that scrutiny to states wishing to join the bloc.

Varying reactions

Non-governmental organizations praised the report as a first step but said it still fell short.

The report “tells us nothing about what member states actually need to do; now they’ve sounded the alarm, they need to offer solutions,” said Naomi Hirst of Global Witness.

“We see little incentive for countries like Malta to scrap these lucrative schemes without strong action from international institutions such as the EU,” said Laure Brillaud of Transparency International.

Jourova, who presented the report along with EU Home Affairs Commissioner Dimitris Avramopoulos, conceded the EU’s powers are limited, given that these policies fall under national control.

But “we cannot do nothing,” she said, adding that these national rules have EU-wide implications when it comes to law enforcement.

Member states “are not off the hook when it comes to certain checks and balances that impact fellow member states,” said Avramopoulos.

Bulgaria, Jourova noted, has announced that it will scrap its golden passport scheme. She said such a move should help authorities fight crime and corruption.

For its part, Malta’s government quickly responded to the report, saying it agreed with many of its recommendations but refuted the charge that its national scheme led to security lapses.

Malta also noted its programme is a major revenue source, bringing in 700 million euros (798 million dollars) over four years.