Reporters from the Organised Crime and Corruption Reporting Project (OCCRP) have expressed concern at how citizenship and residence-by-investment schemes “are vulnerable to abuse and undermine the fight against corruption in the EU and neighbouring countries.

Seven countries were placed under a spotlight in a series of investigations, Malta, Austria, Cyprus, Hungary, Latvia, Lithuania and Poland. EU accession hopefuls’ visa programme proposals by Armenia and Montenegro.

“The stories show how European countries are selling access to the Schengen visa-free travel area, and even EU citizenship, to foreign investors with little scrutiny, transparency or due diligence,” a report published on transparency international report reads.

According to the rules of the Maltese investment program, the main applicant invests €650,000 in the form of a gratuitous grant to the state fund of the country. Spouses and children of the applicant must pay €25,000 per person, or €50,000 for each child at the age of 17 to 26 years. The main applicant must also invest in stocks, bonds, share or other investments as presented by Identity Malta worth €150,000 and retain them for a period of five years.

Applicants must either buy a property with €350,000 or rent out a property for €16,000 per year, for a period of five years. Lastly, there must be proof that the applicant has been a resident of Malta for the past 12 months.

This final condition was imposed by the European Commission when Prime Minister Joseph Muscat had announced the launch of the cash-for-passport scheme, which was not in the electoral manifesto in the campaign leading up to Muscat’s first victory in 2013.

 In the OCCR report reproduced on Transparency International, it was said that:

“Programmes in all seven EU countries maintain secrecy around recipients of Golden Visas. The origins of beneficiaries’ wealth is 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.”

Following the government’s latest publication of the list of people who have been granted citizenship, reports came in of Russian billionaires who are close to Vladimir Putin having Maltese passports. It must be noted that due to Malta’s laws, those who purchased their citizenship have not been placed on a separate list. Rather, the government publishes the names of everybody who has gained citizenship either by naturalisation, through marriage or investment.

Another issue making headlines in Malta is the low rent requirement for cash-for-passport applicants, at just €16,000 per year, which ultimately distorts the market for affordable homes so desperately needed by locals.

Several reports have come in of Individual Investment Programme (IIP) applicants not meeting the 12 month residency requirement, and never being spotted in their low-end rental property obtained to meet the application requirements.

To place this in the relevant context, it must be highlighted that IIP holders, those who purchased Maltese citizenship-by-investment, benefit from:

Visa-free travel to over 166 countries, including the EU, the USA and Canada; The right to live, work, study in any of the 28 EU countries, Norway, Iceland, Switzerland and Liechtenstein; the eligibility of family members to gain citizenship, including parents of main applicant and spouse, minor children and unmarried dependent adult children; one of the quickest processing times of all EU citizenship programmes.

In addition, applicants must endure a ‘Fit and Proper’ test by the government of Malta to ascertain that they are reputable people. Identity Malta says the government takes due diligence very seriously. The media, together with the public, will just have to take their word for it because of the massive secrecy surrounding the project.

Concerns of money laundering through real estate were raised by the vice chair of Transparency International Portugal, who said that the Golden Visa programmes facilitate this “exponentially”.

In one form or another, either by residency through investment or citizenship by investment, over 20 countries offer the scheme such as Austria, Belgium, Bulgaria, Cyprus, Greece, Latvia, Lithuania, Malta, Monaco, Portugal, Spain, Switzerland and the UK.

Austria, Cyprus and Malta offer both citizenship and residency programmes.