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European Commission launches infringement proceedings against "Golden Passports" granted by Malta and Cyprus



           


Malta, like Cyprus, is being pinned by the European Commission on the practice of "golden passports" (photo: F.Dubessy)
Malta, like Cyprus, is being pinned by the European Commission on the practice of "golden passports" (photo: F.Dubessy)
MALTA / CYPRUS. The European Commission has decided, on Tuesday 20 October 2020, to send letters of formal notice to the States of Malta and Cyprus concerning their decried citizenship by investment programmes.

These practices, also known as "golden passports", allow citizenship to be granted to an individual in exchange for a pre-determined payment or investment. However, as the European Commission states in a press release, "given the nature of Union citizenship, these programmes have implications for the Union as a whole. When a Member State grants nationality, the person concerned automatically becomes a citizen of the Union and enjoys all the rights associated with that status, such as the right to move, reside and work freely within the Union, or the right to vote in municipal and European Parliament elections".

The launch of this infringement procedure is therefore based on the fact that "the granting of citizenship of the Union in exchange for a predetermined payment or investment and without the persons acquiring citizenship showing any real link with the Member States concerned undermines the profound nature of EU citizenship". Moreover, "golden passports" pose risks to security, money laundering, tax fraud and corruption. In her State of the Union address on 16 September 2020, Ursula von der Leyen, President of the European Commission, stated that "European values are not for sale".

Cyprus and Malta are working on new programmes

The Cypriot and Maltese governments now have two months to respond to the letters of formal notice. Without a satisfactory response, the European Commission would take the next step by issuing a reasoned opinion on the matter. The procedure could go as far as a referral to the European Court of Justice.

Cyprus has just announced the abolition of its "Citizenship through Investment" programme as from 1 November 2020. It had existed since 2007 and could nevertheless be revived in another form.

A former president of the Supreme Court, Myron Nikolatos, was asked, in September 2020 - after the broadcasting of a compromising report on the case by the Al Jazeera channel showing Cypriot police officers, a member of parliament and the president of the Nicosia Chamber of Commerce offering assistance in obtaining a passport to a fictitious Chinese investor with a criminal record - to set up an independent panel of forty lawyers, accountants and economists. The deadline for applications is 2 November 2020. They will be paid to reflect on the "possible misdeeds of the programme" and will have three months in which to make their conclusions.
 

"Citizenship is a competence of the Member States"

For its part, Malta stopped its Individual Investor Programme (IIP) - which would have benefited 1,460 families (500 applications refused) according to the local newspaper The Malta Independent - in August 2020. The Maltese agency in charge has not accepted any more applications since then.

This programme could be extended with a second phase including changes to the rules of residence in particular. "The new regulations will ensure the highest standards in the residency sector through investment.  These regulations will stipulate that individuals will only be able to apply for citizenship after three years of residence or, as an exception, through greater investment after one year. No application for citizenship may be submitted before this period," states a government press release issued on Tuesday, October 20, 2020.

The text also states that "individuals will only be able to apply for citizenship after a thorough due diligence assessment, while those who do not pass this test will not even be allowed to apply for citizenship".

In the same press release, the local authorities assure that "the concerns and recommendations of the European Commission will be taken into account". However, they insist that "citizenship is a competence of the Member States, with each European country deciding on its own which people it believes should receive citizenship".


Frédéric Dubessy


Wednesday, October 21st 2020



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