The Malta Independent 9 August 2020, Sunday

TMIS Editorial - Scrapping the IIP: A step in the right direction

Sunday, 5 July 2020, 11:00 Last update: about 2 months ago

Malta’s controversial passports-for-cash scheme, the IIP, will soon cease to exist and a different system focusing more on residency will take its place.

The government’s announcement could not be more welcome after years of criticism and attacks directed at Malta both from abroad and within.

While other countries around the world, including several EU Member States, run their own citizenship schemes, Malta’s IIP proved to be controversial for a number of reasons; mainly that the only criteria for wealthy foreigners to become Maltese citizens was their ability to dish out the cash. The choice of concessionaire – Henley and Partners – also caused a stir.

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The Opposition had, until recently, never taken a clear position on the matter. It had previously expressed itself against the concept of selling citizenship to those who can afford it, but later said it would retain the scheme. It was only recently that the PN, under Adrian Delia, said it would scrap the scheme completely.

Prime Minister Robert Abela recently hinted that the IIP would be revised but retained, nonetheless.

That seems to have changed this week, when Parliamentary Secretary Alex Muscat announced that the IIP will cease to exist by the end of September, even if the 1,800-application limit will not have been reached by then.

Instead, there will be a new system – well, not a system really, but new avenues with which high net worth individuals can become Maltese citizens.

The new programme will focus more on residency – meaning that applicants will first have to become residents and live in Malta for a time, before they can apply for citizenship.

Now, one might say that this is not all that different from the IIP; applicants will be able to pay a substantial sum of money after a period of residency of one or three years, and they will get the coveted Maltese (and EU) passport.

But in a press briefing on Friday, Muscat explained that he was not happy with the low number of IIP applicants who actually went beyond their initial ‘investment’ and opened up a business in Malta. The Chamber of Commerce, which recently called for the suspension of the IIP until a revised version is rolled out, will be working with the government to ensure that more successful applicants invest in the island beyond their initial €600k or €750k payment.

Applicants will also have to make a mandatory €10,000 donation to Maltese charities.

While some might say that this is still not enough – that multimillionaires can afford to pay much more for their Maltese citizenship, it seems that the mentality behind the scheme is changing for the better.

It was also explained that the due diligence process, which is quite rigorous but not completely infallible, will be strengthened. Hundreds of thousands are spent every year on background checks on applicants – a fact which, for some reason, has never been given much prominence by the government.

Muscat said that while the success rate of the due diligence process was already very high, it can and will be improved.

Journalists were given a detailed presentation of the long and meticulous process of how applicants are screened against international police lists and how their backgrounds are cross-referenced with company data, media reports and also through the use of on-the-ground intelligence provided by top notch international companies in the field.

The reality is, that even if one bad apple manages to get past this screening process, it will shed a bad light on the entire scheme, as has happened in the past. But we must also acknowledge the fact that the due diligence process was largely successful. We must also acknowledge the fact that some of the criticism directed at the IIP came from quarters linked to the competition from other countries.

Yet the fact remains that Malta, with a looming Moneyval deadline on money laundering reforms, cannot afford to be seen as a country with lax controls when it comes to citizenship programmes. One hopes that the announcement of the continuation of some sort of citizenship programme will not jeopardise Malta’s position further in these troubling times.

We also hope that the new programme will not serve only as a cash-generating machine but create a genuine link between applicants and Malta and that they actually contribute more to our society beyond paying their required investment.

We have said before that we do not believe in the concept of selling citizenship, and we still feel that passports should not be sold to the mega rich just because they can afford them.

But we have also seen how important the money generated by the scheme was during the Covid-19 pandemic, and the projects that have been paid for by the National Development and Social Fund, where 70% of the IIP proceeds go.

To that end, a system that does not grant immediate citizenship against a cash payment and that can hopefully create a more genuine link between Malta and the applicants is a step in the right direction.

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