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EU to Launch Legal Action Against Cyprus & Malta

EU Malta Cyprus passport

Following Al Jazeera’s in-depth investigation into Cyprus’ citizenship-by-investment scheme, the EU has announced it will take action against the provision of golden passports by EU members, focusing mainly on Malta and Cyprus.

The European Commission believes these countries’ golden passport schemes go against “the essence of EU citizenship” and need to be reformed or eliminated to better reflect the region’s values and objectives.

More specifically, the Commission said in a statement: “The effects of investor citizenship schemes are neither limited to the member states operating them, nor are they neutral with regard to other member states and the EU as a whole…The commission considers that the granting of EU citizenship for pre-determined payments or investments, without any genuine link with the member states concerned, undermines the essence of EU citizenship.”

According to the European Commission, in addition to the scandals that have plagued both countries’ schemes, this investigation will be set in motion because both Cyprus and Malta offer passports to investors who lack “a genuine link with the country” as they are not forced, as part of the schemes’ requirements, to live there for any amount of time.

As EU members, Cyprus and Malta cannot be prevented from offering these types of programs but they can be obliged to establish rules that require applicants to reside in the country for a certain period to be able to receive their passport.

Vera Jourova, who sits as VP at the Commission’s Value and Transparency Office, said, “There cannot be a weak link in EU efforts to curb corruption and money laundering.”

Furthermore, Sven Giegold, an MP who’s part of the EU’s Green group, said, “Passports and visas are not a commodity.”

“Malta and Cyprus give shelter to criminals and the corrupt along with their wealth,” he said, adding that programs ran in this fashion “[endanger] internal security in Europe.”

Maltese Prime Minister Robert Abela, in light of the accusations, defended his country and its passport schemes.

“We will be defending Malta. Had it not been for the contributions from that programme, which we are in the process of winding down, we would probably not have been in a position to present a budget of this scale,” he said in a meeting presenting the government’s annual budget.

Both countries now have two months to eliminate or overhaul their citizenship by investment schemes to prevent the European Commission from presenting the case before the EU’s Court of Justice, which could lead to penalties being imposed on both countries.

Cyprus has already suspended its program starting on November 1st of this year, while Malta has overhauled it, setting up a residency program in its stead.

Despite this, the European Commission is concerned that these types of programs will continue operating.

EU spokesperson Christian Wigand said, “Malta in fact informed the commission that it envisages the prolongation of citizenship for investment…and while Cyprus very recently announced it will end its current scheme as of 1st of November, it will continue to process pending applications.”

“We understand there are already calls regarding the introduction of new schemes…such schemes are in violation of E.U. law, and this is why we are launching the infringements today,” Wigand added.

European-wide efforts to tighten regulations concerning the sale of passport by EU members have failed to garner much interest.

Earlier this month, Jourova said that these discussions, which sought to cover up “hole in the EU system,” were “not very convincing.”

Jourova added, “It was a disappointment that there was not enough interest from many . . . member states to have a better chance to see how the passports are granted,” since “this is a problem of the whole family.”