BRUSSELS (AP) – The European Commission on Tuesday introduced infringement procedures against Cyprus and Malta under its “Golden Passport” programs, in which rich people can gain EU citizenship in exchange for investment.
The EU executive said the lucrative schemes violate EU law and undermine “the essence of EU citizenship”.
Cyprus recently announced that it was ending its program amid allegations that a top state official and an experienced legislator were trying to circumvent strict vetting rules.
Cyprus says it will terminate its program from 1 November, although the Commission notes that the country plans to process current applications.
The Cyprus program was introduced in the wake of the 2013 financial crisis that brought the country to the brink of bankruptcy and forced it to accept a financial rescue program from creditors. Like a similar program in Malta, it has attracted many foreign investors as a passport from European Union countries automatically extends the holder’s access to the EU across 27 countries.
Around 4,000 Cyprus passports have been issued to investors under this program, generating over 7 billion euros ($ 8.25 billion). In Malta, the event was one of the topics that investigative reporter Daphne Caruana Galizia reported in 2017 before being blown up by a car bomb while driving.
EU Commission spokesman Christian Wiegand said “the plans remain for some time, both in the respective states and similar investment schemes can be replaced”. “Malta has indeed informed the Commission that it envisages promoting foreign investment of citizenship.”
Malta responded in a statement that its program would soon come to an end and would be replaced by new residency regulations “which take into account the concerns and recommendations of the European Commission.”
Malta’s information department said that the agency has stopped receiving applications since August on charges of running the program. However, it defended the plan, insisting it helped “save lives and jobs” during the coronovirus epidemic.
The new rules will determine whether candidates for Maltese citizenship require a three-year residency, or a year “exception through higher investment.”
The commission set a deadline of two months to respond to letters of formal notice to both countries and may eventually decide to refer the matter to the court.
The anti-corruption watchdog Transparency International welcomed the commission’s decision, saying the scheme served “corrupt interests, not the common good”.
In a report last year, the Commission criticized Bulgaria for offering passports in exchange for money to investors without any real connection to the country.
Wiegand said that the commission has also sent a letter to the Bulgarian authorities asking them to end their citizenship scheme and provide detailed information about the program within a month.
Transparency International asked the European Union Commission to investigate other similar schemes in the block, specifically mentioning Portugal and Austria, to determine if they were legal.
Nicole Winfield in Rome contributed to this report.