ANTI-CORRUPTION watchdog Transparency International said that schemes rewarding investors with residence permit and citizenship are vulnerable to abuse, undermine fight against corruption in Europe and increase the risk of money laundering.
“Transparency International is calling on the EU to closely monitor these schemes and act in order to maintain the integrity of European borders against the corrupt and their assets,” the Berlin-based non-governmental organisation said in a statement on its website on Monday.
The statement came in response to reports published on the website the Organised Crime and Corruption Reporting Project (OCCRP), which said such schemes allow persons deemed close to Russia’s President Vladimir Putin and his predecessor Boris Yeltsin as well as members of Angola’s ruling class to benefit.
Reporters at OCCRP investigated these schemes, widely known as “Golden Visas” in seven European Union member states, Austria, Cyprus, Hungary, Latvia, Lithuania, Malta and Portugal, plus two non-EU member states, Armenia and Montenegro. The reports showed how some European countries are selling access to the Schengen visa-free travel area with “little scrutiny, transparency or due diligence”.
“It is clear that due diligence procedures in some EU countries, such as Hungary and Portugal, have not been rigorous enough,” Casey Kelso, advocacy director at Transparency International was quoted as saying. “Citizenship and residency are among the most valuable assets a country can offer an individual, but EU member states have not even been applying the same minimum checks that banks are supposed to apply to their high net-worth customers”.
Cyprus, not part of the Schengen area, has repeatedly attracted criticism for its citizenship-by-investment scheme which allows investors to acquire Cypriot citizenship with an investment of as little as €2m. The current scheme, in place since 2014 and repeatedly revised, provided initially for a €5m investment. It also provides that applicants have a clean criminal record.
In comments made to OCCRP, Ana Gomes, a member of the European parliament (MEP) described Cyprus’ scheme, introduced in response to the unprecedented financial disaster of 2013, as “absolutely perverse, immoral and increasingly alarming”.
In 2014, the European Parliament criticised Golden Visas, singling out that of Malta which it described as an “outright sale,” and asked the European Commission to issue recommendations to member states. “EU citizenship should never become a tradable commodity,” the European Parliament said.
“Programmes in all eight EU countries maintain secrecy around recipients of Golden Visas,” Transparency International said. “The origins of beneficiaries’ wealth (are) not sufficiently scrutinised and the public lacks details of the investments and who ultimately benefits from them. In the absence of public or media scrutiny, Golden Visa programmes create opportunities for current and former officials to escape prosecution and funnel illicit funds across borders”.
Montenegro, which is currently in negotiations to join the EU, has granted citizenship to a former Thai politician and another from Palestine who are both facing charges related to corruption and embezzlement respectively, Transparency International said.
“The Hungarian case is especially peculiar since profits from the Golden Visa programme do not appear to benefit the country but rather find their way into unknown pockets via companies, all but one of which are seated in offshore tax havens that trade in Hungary’s Golden Visa bonds,” Miklós Ligeti, head of legal affairs at Transparency International Hungary was cited as saying.
Susana Coroado, vice-chairwoman of the Portuguese branch of Transparency International, said that Golden Visa schemes facilitate exponentially the risk of “money laundering”.
The European Commission “must take heed of today’s revelations and ensure that proper oversight is in place if these programmes are to continue,” Transparency International said.
Michalis Michael, the chairman of the Cyprus Investment Promotion Agency (CIPA), said that the government-sponsored body is about to introduce stricter criteria and procedures governing the Cypriot Golden Visa programme, with the inclusion of a registry of related service providers, as instructed by the cabinet in January.
Still, the new programme will not be more transparent compared to the current one, which only provides for the publication of notices by applicants in the Cypriot press.
Cyprus issued over the past 10 years 1,685 passports to investors and 1,651 to members of their families with a total benefit of €4.5bn plus.