Henley & Partners expects that around 200 to 300 foreign individuals will be acquiring Maltese citizenship every year after the initial pilot phase of the project.

Henley and Partners won a public tender to market and sell what is known as the Individual Investor Programme, or the citizenship scheme, an idea that has been strongly criticised by the Nationalist Opposition.

Eric Major, CEO of Henley and Partners, told The Malta Independent in a one-on-one interview that the exercise will not have a limit but costs and the rigorous due diligence process will naturally limit the number of people who apply and acquire Maltese citizenship.

'Rigorous 4-tier due diligence'

Mr Major explained to this paper that its clients normally seek a foreign citizenship for any of five main factors; security reasons, the need for business mobility, education, to improve on their quality of life or tax reasons.

All clients will have to undergo a strict 4-tier personal background check to be deemed eligible for the programme. They would first have to approach Henley & Partners, either directly or through authorised intermediaries. They would then have to fill in no less than seven applications issued by the government of Malta. “During this step it is crucial that the right questions are asked, and Henley prides itself in being the most widely recognised and most experienced player in the sector. We know the right questions to ask,” said Mr Major. “It is vital that we fully understand what the client’s story is.”

Next, the application forms will be submitted to Individual Investor Programme Malta Ltd, which will be led by Michael Lucas. The company will make sure that all the forms have been filled in properly before they reach the next step. The forms are then taken to IIP Processing Ltd, managed by Mark Stannard, where the applications will be scrutinised from scratch. The ‘World Check’ system is used here to perform detailed background checks on the applicants. “Basically, IIP Processing will confirm the legitimacy of the existing documentation.”

After this process is complete, secondary checks will be carried out by due diligence companies contracted by the government. Checks can also be done locally by “men on the ground” in the countries of residence of the applicants. Further checks will be done using specifically tailored software.

Finally, IIP Processing will present its recommendation to Identity Malta. The government agency will have the final say and it will not be required to agree to the firm’s recommendation. Identity Malta will also be able to do further checks using its access to information from Interpol and other law enforcement agencies.

“Programmes like these are not worth doing unless the proper due diligence and anti-money laundering measures are in place.”

IIP scheme is ‘not cheap’

Mr Major said that the impression that the IIP scheme is cheap is incorrect. “In other countries clients might be required to invest in property, which is an asset in itself. In other countries you might be lending money to the government on the promise of getting it back after a number of years. The Malta scheme is different because clients will be paying €650,000. They will be parting with their money, so it’s definitely not cheap when compared to other schemes.”

The money generated by the IIP will go into a National Development Fund but according to Mr Major, the “real bang of the buck” is not the initial payment. It is the possibility of further investment in the country. Whilst acknowledging that many clients will probably not remain or invest in Malta, the few that remain are “the ones that count.” They may choose to invest directly in Malta and they will also contribute to an increase in consumption, which is one of the main driving forces of the GDP.

Henley not surprised by political controversy

When asked if he expected the PN’s reaction to the scheme Mr Major said that he was not surprised. “This is a politically loaded issue and we understand why people start to ask questions. Some countries where we render our services are still discussing the morality of it all to this day.”

Apart from criticising the scheme, the PN has also promised to revoke citizenships when it is elected to power. But Mr Major is not particularly worried about this and thinks that the possibility of that happening is highly unlikely. “Revoking citizenship is not that easy. Usually it can only be revoked if clients have made a false declaration or if they are a threat to national security.”

Asked about the current court case instituted by Arton Capital, a firm that unsuccessfully bid for the IIP tender, Mr Major said that Henley does not expect any real problems or delays. “They might be trying to slow us down for commercial reasons but I do not see how the court can revoke a tender that has been awarded in a legitimate way.”

In the past days, the IIP was also criticised because Maltese citizenship is being advertised as “visa-free travel to countries like the US.” According to some reports, this might lead to a dispute between Malta and the US. But Mr Major says that the US is aware of such programmes and is comfortable with them.

200-300 clients per year after pilot phase

Mr Major said that the IIP will not be a big programme. He expects the number of people who successfully apply to be anywhere between 200 and 300 a year. That is, after the IIP has passed its pilot phase. The figure of around fifty applicants per year, as given by the Prime Minister, refers to the initial years. It would take a couple of years for Henley to get that kind of market awareness and reach those numbers. If the number of applicants increases drastically, the asking price for a Maltese passport can always be “bumped up” to keep the numbers down.

Mr Major said that the government had not suggested any capping on the number of applicants because the programme was not expected to attract a phenomenal amount of applicants. Parliament is still to decide on the issue, with a vote expected tomorrow.