The scheme was recently renamed to ‘Granting of Citizenship for Exceptional Services’.

The budget revealed that in 2021, Malta pocketed €61m (£53m, $60m) from the programme, according to local newspaper Times of Malta.

But the government expects to make less than half by the end of this year – around €30m – and even less in 2023, with a forecasted revenue of €20m.

The report said that sources close to the Maltese government speculated that the drop may be caused by changes in the way profits from the golden passport scheme are managed, and by the fact that a large portion of the programme’s funds were used to fight the outbreak of Covid-19.

Senior people in government claimed that the scheme is “dying”, with interest shown in the scheme on a steady decline, partly due to the increase in minimum sums required to apply and the passing of stricter rules, which also resulted in a ban for Russian nationals following the invasion of Ukraine in February 2022.

Passport agents reported that, since the war in Ukraine started, interest has been at an all-time low.

This has also been coupled with the fact that in September 2022, the European Commission sued Malta as the only remaining member state still running a citizenship-by-investment programme, and referred the country to the Court of Justice of the European Union.

Since the scheme was introduced in 2014, it brought around €800m into the Maltese government’s coffers.

The move follows a letter of formal notice sent by the Commission in October 2020 to Malta and Cyprus.

Cyprus’ citizenship-by-investment scheme was halted a week before the EU threatened legal action.

In its latest clamp down against golden passports in Malta, the EC claimed that “granting EU citizenship in return of pre-determined payments or investments without any genuine link to the member state concerned is not compatible with the principle of sincere cooperation of the Treaty on European Union, and with the concept of Union citizenship, as provided by the Treaty on the Functioning of the European Union”.

The Commission acknowledged that Malta suspended applications from Russian and Belarusian individuals following the invasion of Ukraine, but the country “continues to operate the scheme for all other nationalities and has not expressed any intention to end it”, it added.

In March 2022, members of the European Parliament overwhelmingly voted in favour of banning golden passports in the bloc – with 595 in favour, 12 against and 74 abstentions.

As a result, the EC wrote to Malta again in April 2022, as it is currently the only member state still operating a citizenship-by investment scheme. Malta’s response was deemed unsatisfactory, which led to the matter being referred to the EUCJ.

Malta hits back

The Maltese government said it has taken note of the EC’s decision but, in a statement translated from Maltese, it claimed that “citizenship is the exclusive competence of the state itself”.

As a result, the government rebuked the Commission’s claims that it is breaching European treaties, and it will “continue to object” to the legal interpretation of the issue at hand.

It continued: “It is crucial to note how the government operates rigorous due diligence processes to prevent abuses, mainly money laundering and terrorist financing, and to ensure that only those worthy individuals are eligible for Maltese and consequently European citizenship.

“The government therefore continues to stress that all this is being done in the exercise of competence relative the Treaty on the Functioning of the European Union and that it always honours the obligations and conditions as stipulated in the treaty.

“This programme was carefully scrutinised in evaluation exercises on the risks of money laundering and the financing of terrorism by several international institutions, the main ones being Moneyval and FATF. The entities and their processes successfully passed the same evaluations and were recognised as a model for other countries in the fight against the activities of the mentioned organised crime.

“These processes also include information sharing and this result means that the programme is sufficiently transparent with third country jurisdictions.

“This whole process will provide the opportunity for the Maltese government to continue to strengthen its arguments, as well as to refute the interpretations that have been raised regarding the treaties, while leaving the matter for the final decision to the EUCJ.”

The vote – which saw 595 in favour, 12 against and 74 abstentions – follows commitments by the European Commission, France, Italy, Germany, the UK, Canada and the US to limit wealthy Russians with links to the government from accessing golden passports.

The EP deemed citizenship-by-investment schemes as “objectionable from an ethical, legal and economic point of view and pose several serious security risks”.

The schemes are currently in place in several countries across the continent and have been described as “free riding” with the European Parliament highlighting that EU citizenship was never intended to become a commodity.

MEPs said that applications have been accepted even when requirements were not met and demanded for these schemes to be phased out as soon as possible, once again.

As a result, they have also called for an EU levy of “a meaningful percentage” on the investment made until golden passport schemes are shut down, and to apply one indefinitely for visas.

The EP also proposed to ban intermediaries involved in citizenship-by-investment schemes and to impose a “strict and binding regulation” for their role in residency programmes, which should include sanctions.

Visas

On the golden visa front, or residency-by-investment, the European Parliament said there are less severe risks posed by these schemes, but rules should be put in place to tackle money laundering, corruption and tax evasion.

As a result, the parliament proposed a heavier regulation of these types of visas, including:

• Stricter background checks for applicants, their family members and sources of funds, mandatory checks against EU databases and vetting procedures in third countries;
• Reporting obligations for member states, including a “notification and consultation” scheme to allow other EU countries to object; and
• Requirements for a minimum physical residence for applicants and active involvement, quality, added value and contribution to the economy for their investments.

Russian oligarchs, however, would be excluded from both citizenship- and residency-by-investment schemes under the EP proposals.

Dutch MEP Sophia in ‘t Veld said: “These schemes only serve to provide a back door into the EU for shady individuals who cannot enter in broad daylight. It is time we closed that door, so that Russian oligarchs and other persons with dirty money stay out.

“Member state governments have refused to address the problem, claiming it was not an EU matter. Given what is currently happening, they cannot duck this issue anymore.”

Now, the European Commission has to prepare a legislative proposal or justify its decision not to do so.

Data from the EP’s Think Tank shows that at least 130,000 people benefitted from golden passports and/or visas in the EU between 2011 and 2019 generating revenues of nearly €22bn (£18bn, $25bn) for the countries involved.

And when the country introduced its golden visa scheme in 2019, it undoubtedly attracted a lot of interest.

The visas issued are for either five or 10 years.

The requirements for both are very similar, with one of the main differences being the sum required to be invested: for the former its at least AED5m in a property in the UAE, while the latter is of at least AED10m (£2m, $2.7m, €2.3m) in a local investment fund.

Case study

Nigel Sillitoe, chief executive of UAE-based Insight Discovery, has recently been granted a 10-year golden visa in the country, and he spoke with International Adviser about his experience in getting one.

He found the application “very straight forward”, also helped by the fact that he hired a public relations officer (PRO), as they deal with government agencies in the UAE.

“I was nominated back in January [2022] and received my 10-year residency within six weeks,” he said. “There are three ways to apply, either directly via the government golden visa website, being recommended by an influencer – such as a senior Emirati – or being a VIP being courted by the prime minister’s office.

“Unfortunately, I never received my call from the PMs office,” Sillitoe jokingly said.

He started looking into the scheme after several friends and business contacts obtained one – as he said now over 50,000 people in the UAE have been granted a golden visa.

“When I investigated further, it soon became obvious that I would be mad not to apply, ” he added. “Besides the status of being granted a golden visa, the main benefit is that I no longer have to apply to renew my residency every two years.

“More importantly, it saves money as the upfront fee for a 10-year golden visa is just AED4,500, a big saving over renewing your residency every two years over 10 years.”

Benefits

If applicants cannot secure a recommendation, however, self-sponsorship can be an attractive route, Sillitoe said, especially for employees of a company.

“Let’s take the example of an executive working for a financial advisory business in Dubai,” he said. “If this individual decides to take some time off or is fired, with a golden visa they can stay in the country and maintain their bank accounts and rental agreement.

“If, however, you don’t have a golden visa, you lose your job and cannot find a new role within three months, which will in turn provide you with a two-year residency, you have no option but to leave the country and have your credit cards and bank accounts closed.

“The only way around this is to set up a company and sponsor yourself, however, this can be pretty expensive, plus you still have to renew your residency every two years.

“Another benefit is that if there was another covid variant and the UAE introduced a new travel lockdown, if you were stuck overseas but held a golden visa you could still enter the country. This exemption I believe only applies to Emiratis and golden visa holders.”

Tips

Sillitoe emphasised how important it was for him to have a professional figure guiding him through the process.

“I outsourced it to a PRO, a great investment considering it cost just AED1,000.”

He did warn future applicants to make sure the PRO they choose is accredited with the golden visa agency.

Sillitoe said that, before applying, candidates should make sure they have a “a terrific biography, which spells out your career, how long you have lived in the UAE, what contribution you have made and your future plans whilst living here”.

People should also time their applications right and make sure they make their submissions during a period where they don’t have any travel plans because “the PRO will need your passport for what could be just one week or several weeks, depending on where you are within the queue”.

While addressing the European Council on 24 February 2022 in an emergency summit following Russia’s invasion of Ukraine, which Metsola deemed “outrageous” and a move of “authoritarianism against democracy”, she also took aim at CIB programmes.

In her speech, she said: “Let me say that the Kremlin has long thought it could buy its way into Europe.

“It is time to close any loopholes, end the dangerous phenomenon of golden passports that provide a backdoor to European citizenship and ensure that Russian money does not become as critical as Russian gas.

“At the end of the day, this is how we achieve our strategic autonomy.”

A history of disapproval

The EU has been critical of so-called ‘golden visa’ programmes for years, as they posed security threats for the entire bloc following several scandals of dubious practices and passports being awarded to people linked to organised crime and/or money laundering.

They have also been very popular among Russians and Chinese wealthy individuals.

For instance, Cyprus’ CBI scheme was halted in 2020 after ‘weaknesses’ in the system were highlighted by media reports, leading to a full inquiry into the programme in 2021 which found that over half of passports had been approved “illegally”.

The EU also took legal action against Cyprus’ and Malta’s golden visas via an infringement procedure in 2020.