Golden passports on trial: Can the EU stop countries from selling citizenship?

Update: On 29 April, the Court delivered its judgement on the Commission v Malta case. See our statement: EU Court of Justice puts an end to harmful citizenship-by-investment schemes.

Last year, it was revealed that a young Russian man was sentenced to five years in jail for running a money laundering service as part of an international network linked to organised crime. Investigative journalists found that he simultaneously held citizenship from Malta, a Mediterranean nation which is part of the European Union (EU). He and his father were able to acquire Maltese passports in 2022 in exchange for an investment. Following his conviction in the United Kingdom, Malta has reportedly initiated the process of revoking his passport.

Citizenship-by-investment programmes, also known as “golden passports”, enable foreign nationals to obtain citizenship in a country – and in the case of EU member states like Malta, citizenship of the EU – in exchange for a financial contribution. In recent years, many cases have demonstrated that criminal and corrupt actors have bought such golden passports, and a consensus has emerged that these schemes open the EU’s doors to money laundering, corruption and security risks. This led to interventions from EU institutions and the closure of some of the programmes.

Now, Malta is the only remaining EU member state which still operates a golden passport programme. That is subject to change if the EU Court of Justice (CJEU) confirms the scheme’s illegality in next week’s highly anticipated judgement.

While many countries around the world have set up mechanisms to attract investment into their countries, golden passport programmes are schemes with specific features that make them vulnerable to abuse. They offer a fast-track to citizenship, with often short processing times for applications. The qualifying requirement is a large and passive form of investment – such as in luxury property, which is one of the most common ways for laundering illicit gains. Most significantly, they have little to no physical residency requirement.

Our 2018 report with Global Witness, European Getaway, documented how such golden passport and golden visa programmes had catered to people with high-risk profiles. We found that thousands of rich foreigners had bought citizenship or residency rights from EU countries where they have no real connection, and countries often accepted the money with few checks on who or where it came from. This has made the entire EU vulnerable to dirty money, while undermining global efforts to track down illicit wealth and hold corrupt actors accountable.

It has been clear that what’s on sale is access to the EU, which makes these schemes highly desirable for those seeking a safe haven for themselves and their money, or opportunities to commit white-collar crime. In addition to increased mobility, being a citizen of an EU member state brings certain privileges; among them is less scrutiny when opening a bank account or a company.

For example, our 2023 analysis of French corporate records with the Anti-Corruption Data Collective uncovered at least 20 cases of Maltese golden passport-holders who had opened companies in France, and declared only their Maltese citizenship to the authorities. Analysis done by the Daphne Caruana Galizia Foundation shows, however, that the majority of them are originally from Russia and acquired Maltese citizenship between 2016 and 2019. Some of these individuals are under sanctions by Ukrainian authorities and/or are connected to politically exposed persons in Russia. Other cases show that suspicious individuals have used EU passports to invest in luxury real estate, potentially bypassing restrictions in place for third-country nationals.

In recent years, several journalistic investigations have made it clear that citizenship-for-sale programmes are broken beyond repair. In many reported cases, it was obvious that governments ignored very clear risks and red flags at the application stage. In others, serious problems came to light afterwards.

In 2018, Finnish police raided a real estate firm owned by Russian businessman Pavel Melnikov as part of a major financial crime investigation. Journalists were able to determine that he was simultaneously a Maltese citizen, thanks to the golden passport programme. The case went on for years and, just two months ago, a court in Finland found him guilty of aggravated tax fraud and aggravated accounting fraud – his defence denies the allegations and is reportedly likely to appeal. His is the only confirmed case of Malta having revoked a golden passport so far.

Transparency International has consistently called for EU-level regulation and oversight of investment migration schemes to address corruption and money laundering risks, and to address shortcomings across countries that had enabled passport-shopping and abuse.

Over the last five years, the European Commission and the European Parliament have echoed Transparency International’s concerns. After conducting their own analyses, both took the position that citizenship-for-sale schemes should be banned in the EU.

Cyprus and Bulgaria discontinued their country's golden passport programmes in 2020 and 2022, respectively. Malta, on the other hand, has refused to end its citizenship scheme, leading the Commission to pursue a ban through a CJEU court case against Malta.

The European Commission considers that granting EU citizenship in return for pre-determined payments or investments without any “genuine link” to the Member State is not compatible with the concept of Union citizenship. In fact, a 2021 investigation by the Daphne Caruana Galizia Foundation, the Guardian and other media outlets confirmed a loophole in Malta’s citizenship scheme that allowed applicants to bypass the 12-month residency requirement – which, on paper, had served to ensure a genuine link to the country.

Last June, the judges heard arguments from both parties.

The Commission’s case argues that Malta has been granting citizenship to individuals without ensuring a genuine connection to the country, breaching its obligation of sincere cooperation between EU member states.

Malta disagrees. The government has maintained that citizenship matters fall strictly under national competence and that the concept of “genuine link” is not a requirement under EU law.

As part of the official procedure, in October 2024, the Court’s Advocate General delivered his non-binding opinion. He rejected the Commission’s case in strong terms, concluding that it “would upset the carefully crafted balance between national and EU citizenship in the Treaties and constitute a wholly unlawful erosion of Member States’ competence in a highly sensitive field which they have clearly decided to retain under their exclusive control.”

Should the judges follow this opinion, Transparency International believes it could create a dangerous race to the bottom.

The Advocate General did not appear to consider that upholding Malta’s claim is, in fact, what risks upsetting the delicate balance between national and EU citizenships. A ruling in Malta’s favour would allow any member state to grant EU citizenship to an unlimited number of people in exchange for investment that only the issuing country of the passport benefits from. These individuals become entitled, in addition to the rights provided by their new country of citizenship, to EU rights and privileges – benefitting from the pieces of sovereignty that other EU member states gave up in the interest of establishing EU citizenship, which in practice means enjoying the four freedoms of the EU.

With this case, the European Commission is asking the Court to clarify EU citizenship in a way that balances each country’s right to set its own nationality rules with the shared interests of all member states.

To maintain this balance, EU law should be understood to prevent member states from granting national – and thus EU – citizenship to individuals from outside the EU who have no genuine link to the country. This interpretation aligns with past Court rulings, which recognised the concept of a genuine link as a “legitimate” basis for acquisition and loss of citizenship.

The EU is founded on four basic freedoms granted to its citizens: free movement of people, goods, services and capital. These four freedoms were not designed to be traded and used as a selling point for citizenship, effectively also offering safe havens to wealthy international criminals who can buy their way into the EU.

What’s more, when the Treaty of the EU was agreed and citizenship was declared a matter under the competence of member states, legislators did not envision that it would be traded and that the four freedoms of the EU would be used as a selling point. With the creation of these programmes, it became clear that there is now a need for the CJEU to confirm their illegality or, as Mr Cox’s analysis highlights, to detach national citizenships acquired through these schemes from EU citizenship – otherwise EU principles will continue to be violated.

The stakes for the case are high. A decision favourable to Malta would entitle other EU member states to create similar programmes and increase risks of regulatory arbitrage . It could create an environment with several other states looking to make ever-more-competitive offers, including to criminals and the corrupt in exchange for investment. A ruling in favour of the European Commission could lead to the end of golden passport schemes or stricter criteria for granting citizenship and a harmonisation of rules.

All will be revealed on 29 April, when the Court delivers its judgement.

Transparency International collaborated with Simon Cox, a migration and EU law expert, to analyse the Advocate General’s opinion.