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European Commission shows teeth, advances legal action against Cyprus & Malta over golden passports

Transparency International welcomes the advancement of infringement procedures against Cyprus and Malta over their haphazard sale of citizenship. In recent years, myriad investigations and Transparency International’s own research have demonstrated that EU Member States’ investment migration schemes have served corrupt interests, rather than common good. The Commission’s action this week should send a strong signal also to other countries with similar risky schemes.

The European Commission announced yesterday that it has sent a “reasoned opinion” to the government of Cyprus, which continued to process citizenship applications from rich foreign nationals despite the suspension of the programme. The Maltese government reportedly received another “formal notice” requesting for the sale of citizenship to stop under the new programme. The Commission said it will proceed with the reasoned opinion also in the case of Malta, should the government’s response be unsatisfactory. Both countries could find themselves in the European Court of Justice.

“We are pleased to see that the European Commission remained firm and intends to ban the sale of citizenship in the EU, following years of corrupt abuse of golden visa and passport schemes,” said Maíra Martini, Transparency International’s Research and Policy Expert on Corrupt Money Flows. “The Cypriot government’s decision to suspend the programme and the Maltese government’s rebranding of its investment migration scheme did not appear to convince the Commission that the matters are now resolved, and rightly so.”

With the infringement procedures initiated in October 2020, the European Commission took the position that by granting citizenship to individuals without ensuring a genuine connection to their countries, Cyprus and Malta have been breaching their obligation of sincere cooperation between EU Member States. Despite the threat of legal action, both countries continued to effectively sell citizenship.

Just this week, the government-commissioned independent investigation in Cyprus found serious irregularities and breaches in the country’s now-suspended citizenship scheme. Prior to that, investigations by the Al Jazeera Investigative Unit revealed that dozens of convicted criminals, fugitives and politically exposed individuals had bought citizenship from Cyprus. Additionally, a covertly filmed documentary implicated high-level politicians in corruption related to the scheme.

In April, investigations into documents leaked to the Daphne Caruana Galizia Foundation and The Guardian confirmed a loophole – first uncovered by Transparency International in 2018 – in Malta’s citizenship scheme which allows applicants to bypass a 12-month residency requirement.

“Loopholes in Member States’ golden visa and passport schemes have essentially served as a backdoor for the corrupt and their money into the EU. Cosmetic changes haven’t helped solve the problem, and abuse has continued,” added Martini.

The European Commission should conclude its infringement procedures against Cyprus and Malta as well as against other schemes for potential breaches of EU law. It must also heed the European Parliament’s call to phase out golden visa programmes completely. Until such time, the Commission should seek to harmonise standards at the EU level to avoid Member States racing to the bottom in terms of security and due diligence, and to prevent risky individuals from shopping for EU passports and visas between jurisdictions.

Notes to editors

Transparency International will release the Global Corruption Barometer – European Union survey on Tuesday, 15 June at 6:01 CEST.

Global Corruption Barometer surveys present comprehensive sets of public opinion data on corruption. The report will cover all 27 EU Member States, including Cyprus and Malta, and reveal citizens' views on government corruption and the relationship between business and politics, among other issues.

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