With its cash-for-passport practices, Europe has opened its door to the criminal and corrupt, with some member states running a lucrative industry of trading citizenship for money, said a new report by Transparency International and Global Witness.
“If you have a lot of money that you acquired through dubious means, securing a new place to call home far away from the place you stole from isn’t just appealing, it’s sensible,” said Naomi Hirst, senior campaigner at Global Witness, ahead of the publication of the report.
“Golden visa schemes offer a safe haven from authorities who might be looking to seize your stolen assets, and the freedom to travel without raising suspicion.”
The matter has come into focus only recently, after Finnish authorities raided a real-estate firm controlled by a Russian businessperson who had purchased Maltese citizenship following suspicions of massive money laundering.
In another example, Hungary issued permits to the family of the Kremlin’s foreign intelligence chief, who is covered by European sanctions.
The two anti-corruption organisations looked into practices of four member states that sell passports (Austria, Bulgaria, Cyprus, Malta) and 12 that grant residency rights to foreign investors.
Schemes to trade citizenship or residence rights for investment are currently applied in 13 EU countries: Austria, Cyprus, Luxembourg, Malta, Greece, Latvia, Portugal, Spain, Ireland, Britain, Bulgaria, the Netherlands and France. Hungary, meanwhile, has terminated its programme.
According to the report “European Getaway – Inside the murky world of golden visas”, in the course of the past 10 years, the golden visa scheme of several member states has given the EU more than 6,000 new citizens and around 100,000 new residents, most of them with questionable sources of funds and wealth.
Spain, Hungary, Latvia, Portugal and the UK granted the highest numbers of ‘golden visas’ to investors and their families, followed by Greece, Cyprus and Malta.
Altogether the EU member states have attracted around €25 billion in foreign direct investment through the golden visa programmes, the report found. Spain (€976 million), Cyprus (€914 million), Portugal (€670 million) and the UK (€498 million) came out as the top earners when looking at the annual average respectively.
While the price tag for the EU golden visa schemes varies – a residency can cost €250,000 in Greece or Latvia, a passport in Cyprus €2 million or sometimes up to €10 million in Austria – it is especially the small member states that benefit from the schemes.
Three countries specifically stand out in the report. Cyprus has raised €4.8 billion since 2013 with the sales of more than 3,000 passports to controversial figures from Ukraine, Russia and Syria.
Malta raised about €718 million since 2014 while Portugal earned €4 billion with granting over 17,000 residence permits since 2012 , with the option of citizenship after 6 years
Serious risk for EU
The two organisations also said member states apply different criteria and governments do not know all details about who is allowed in.
“Those schemes pose a serious of risks in the member states and the EU as a whole: on the one side, there is the risk of high-risk profile people and corrupt individual criminals entering the EU, and on the other there is the risk of corruption of the states themselves,” Laura Brillaud of Transparency International told reporters in Brussels.
Except for the UK, Cyprus, Ireland and Bulgaria, the countries running those schemes are subject to the Schengen area and the free movement inside the EU.
While Cyprus and Portugal, for example, do not run checks on the applicants’ sources of funds and wealth, Portugal and Malta do check if applicants are the subject of ongoing investigations in other countries.
According to Brillaud, another type of risk is related to the lack of harmonisation of standards and practices on EU level: “The ultimate risk is that the EU integrity and EU security is undermined due to the lack of proper governance of the schemes.”
“EU passports and visas are not a commodity. Money should not be the criterion for citizenship and residence rights in the EU,” said Sven Giegold, fiscal spokesperson of the Greens in the European Parliament.
“We need a European law to curb the sale of European citizenship rights and we need to step up the fight against money laundering. The Commission must set minimum standards for these programmes and ensure that they comply with all governments offering passports and visas to investors. ”
After receiving complaints that the schemes could compromise EU security, the European Commission has launched an investigation and is expected to publish a citizenship schemes report next month.