EU Justice Commissioner Věra Jourová is “especially alarmed” with Malta’s golden passport scheme as concerns are raised about the wealth provenance of Russian clients.
“It is a big concern when a Russian citizen who has worked his whole life in middle or senior management — where salaries aren’t very high — suddenly has the money to buy citizenship in Malta,” the commissioner said in an interview with The Financial Times.
In Malta, an individual can gain citizenship in return for a €650,000 contribution to the country’s development fund and the purchase or lease of property, as well as investments of at least €150,000 in stocks and bonds.
Family members can be added for an additional fee of €25,000 to €50,000 per person.
The European Commission will put the eight countries, including Malta and Cyprus, that offer golden passports under tougher scrutiny as part of a wider drive against corruption and money laundering.
In a separate interview with German newspaper Die Welt on Tuesday, Jourová criticised the practice of a number of member countries’ practice of awarding golden passports to rich people from outside the EU bloc and urged them to do more to ensure that citizenship was not granted to criminals.
“In cases of any doubt, a person should not have the privilege of citizenship,” Jourová told the Financial Times. “We have no power to ban such a practice but we have an obligation to put high requirements on the member states to be careful. They are granting citizenship for the whole of Europe.”
She also spoke about concerns about the origins of the wealth of Russian applicants for Maltese citizenship.
Once these are granted citizenship – usually against a substantial investment in property or bonds, the citizens are allowed to work and live and freely travel within the Schengen area.
In autumn, the commission will publish a report likely to fault government schemes for not carrying out enough due diligence on applicants and the sources of their wealth, The Financial Times said.
Jourová said: “We want the states to do their due diligence and not to enable criminals to come to Europe and have equal rights as people who came years ago, who work, who pay taxes and have children and have to wait for citizenship.”
The EU’s executive commission will examine each member country’s practices in granting citizenship to people from outside the bloc and the report will then issue new tougher guidelines for member states.
The Financial Times pointed out that high-profile money laundering scandals involving banks in Latvia and Malta – such as Pilatus Bank whose owner is facing money laundering charges in the US – made “citizenship schemes more contentious by drawing attention to the lack of controls on Russian funds entering EU countries”.
Since the scheme started in 2014, more than 700 investors brought €590 million to Malta. The Maltese government has begun to publish the names of individuals granted citizenship.
In 2016, the list included Boris Mints, the Russian billionaire owner of investment company O1 Group, and Arkady Volozh, the founder of Yandex, Russia’s biggest search engine.
In March, a report by Transparency International with the Organized Crime and Corruption Reporting Project (OCCRP) found the passport schemes posed a “major corruption risk” to the EU.
The Investment Migration Council, the industry body that represents investors and governments who take part in the schemes, insists the most popular programmes — in Austria, Malta, and Cyprus — pose no security threat to Europe.