The Russian invasion of Ukraine has brought to light several issues in the citizenship by investment programs in the European Union. The suspension of the investment immigration programs offered to citizens of Russia and Belarus has put pressure on the citizenship by investment programs of countries in the European Union to make structural and global changes. These programs, according to the European Parliament, undermine the essence of European citizenship that was never intended to become a commodity to be bought and sold.
Recently, the European Union Parliament overwhelmingly voted to ban European Member states from issuing golden passports to high-value investors. The European Union Parliament has described the practice, particularly in Malta, Bulgaria and Cyprus, as “free riding”. Applications have been accepted even when requirements were not met.
The European Union Parliament also introduced stricter rules regarding the issuance of golden visas to investors including imposing restrictions on the companies or agents involved in these programs and imposing a fee on investor visas to be collected at the European Union level. The European Union Parliament has also recommended stricter background checks on the applicant, his or her family members and the sources of funds of the investment with mandatory checks against EU database and vetting procedures in third countries; mandatory reporting of member states will be required that will allow member states to object; and requirements for minimum physical residence of applicants with added involvement and added value contribution to the economy.
The European Commission still has a lot of work to do on a legislative proposal regarding the issues or present its arguments on a decision not to do so.
The issues against the investment immigration programs include security risks, money laundering, corruption and tax evasion. These risks are further aggravated by the cross-border rights associated with citizenship in the European Union.
However, the strict due diligence that the citizenship by investment programs apply is a guarantee of the integrity of every investor and should minimize the risks that the European Union is so concerned about. The percentage of violations has also been very minimal.
It is doubtful that this new regulation will pass. It is, most importantly, a direct violation of an individual’s rights and global mobility. Countries who have this program have greatly benefitted economically from the foreign investments with over 21.8 billion euros generated in revenues between 2011 and 2019.