Members of the European Parliament have called for an end to the so-called 'golden passports' which allow rich people to obtain EU citizenship in exchange for investment.
A new report calls for the EU to ban the sale of citizenship by investment schemes and to regulate residence by investment schemes. The schemes confer EU citizenship or resident status on non-EU nationals in exchange for financial investments.
Report author Sophie in ‘t Veld (Renew Europe, the Netherlands) said: “The bar for what counts as an investment has been too low for too long. EU residency should only be awarded to people who are investing in the real economy and who can be trusted to be legitimate investors without criminal backgrounds."
These schemes are characterised by having minimal to no requirements of physical presence and offer a fast track to residency or citizenship status in an EU country compared with the obstacles of seeking international protection, legal migration or naturalisation through conventional channels. Once granted their new status of residency or citizenship, the beneficiaries of the schemes immediately start enjoying freedom of movement within the Schengen area.
The report produced by Parliament's civil liberties committee calls the schemes “objectionable from an ethical, legal and economic point of view”.
Three countries currently have citizenship by investment schemes: Malta, Bulgaria (where the government has tabled legislation to end it) and Cyprus (only processing applications submitted before November 2020). Twelve EU countries currently operate residence by investment schemes. The minimum investment levels range from €60,000 to €1,250,000.
A study has estimated that more than 130,000 people have obtained residence or citizenship in EU countries via these schemes with the total investment estimated at €21.4 billion from 2011 to 2019.
Red carpet for shady people
The report says that the existence of passport-for-cash schemes affects all EU countries because a decision by one member state to grant citizenship for investment automatically gives rights in relation to other countries. These rights include freedom of movement, the right to vote and stand as a candidate in local and European elections and right to access the single market for economic activities.
The schemes can affect other EU countries because of the risks of corruption, money laundering, security threats, tax avoidance, pressure on the real estate sector and an erosion of the integrity of the internal market.
Meanwhile, EU countries do not always consult the available EU databases or exchange information on the outcome of such checks and procedures, according to the committee report. It expresses concern that some countries were reported to have accepted applicants for citizenship who did not meet the security requirements.
In 't Veld said: “A lack of scrutiny meant that the red carpet was rolled out for corruption and money laundering. Shady people paid large sums of money to obtain access to the EU. Communities have not benefited from these sums, but instead suffered from corruption. Journalists investigating some of the people coming in have sometimes faced grave consequences. In more ways than one, the whole of Europe bears the burden of practices that marginally benefit some governments.”
The European Commission launched infringement procedures against Cyprus and Malta in 2020 concerning their citizenship by investment schemes and the report calls on the Commission to advance those procedures.
Gas or cash?
The Russian invasion of Ukraine has further catapulted the schemes into the spotlight in recent weeks.
Parliament President Roberta Metsola tweeted. on 25 February: “The Kremlin has long thought it could buy its way into Europe. It is time to close any loopholes, end the dangerous phenomenon of so-called golden passports that provide a backdoor to European citizenship and ensure that Russian cash does not become the next Russian gas.”
In a resolution adopted on 1 March, MEPs demanded that EU countries with such schemes review all beneficiaries and revoke those attributed to rich Russians, especially the ones linked to sanctioned people and companies.
MEPs will debate the report today Monday and vote on it tomorrow Tuesday 8 March 2022.
