The European Commission on Wednesday published a report criticizing schemes that allow foreign citizens to “buy” EU residency or citizenship through investment.
The schemes — dubbed “golden visas” and “golden passports” — have raised concerns over security and money laundering.
Currently, Bulgaria, Cyprus and Malta operate schemes where investors spending between €800,000 to €2 million can obtain citizenship. The Commission pointed to concerns when it comes to security, money laundering, tax evasion and transparency of these citizenship programs.
“Checks run on applicants are not sufficiently robust and the EU’s own centralized information systems, such as the Schengen Information System (SIS), are not being used as systematically as they should be,” the Commission wrote in a statement.
The Commission added that “enhanced checks (‘due diligence’) are necessary to ensure that rules on anti-money laundering are not circumvented” and that “monitoring and reporting is necessary to make sure that individuals do not take advantage of these schemes to benefit from privileged tax rules.”
The Commission also found “a lack of clear information on how the schemes are run, including on the number of applications received, granted or rejected and the origins of the applicants. In addition, member states do not exchange information on applicants for such schemes, nor do they inform each other of rejected applicants.”
Similar concerns about transparency were raised regarding residency schemes. Twenty EU member countries currently run schemes that grant a right of residence to third-country nationals on the basis of investment in the country. As holders of residency permits, recipients are able to travel freely within the Schengen zone for a maximum of 90 days in any 180-day period.
“There are certain security obligations under EU law that must be carried out before issuing a visa or residence permit to foreign investors,” the Commission wrote. “However, there is a lack of available information on the practical implementation and discretion in the way that member states approach security concerns,” it added.
The president of Cyprus, Nicos Anastasiades, criticized the Commission report, saying his country is being singled out. “At some point, these double standards must end,” he said.
Besides monitoring member countries’ compliance with EU rules, the Commission is now calling on governments to make sure border and security checks are implemented.
The Commission will monitor wider issues of compliance with EU law raised by investor citizenship and residence schemes — to ensure “funds paid by investor citizenship and residence applicants are assessed according to the EU anti-money laundering rules” — and will take necessary action as appropriate.
A new group of experts will be created with a mandate to set up a system of exchange of information, and develop a common set of security checks for investor citizenship schemes.