The European Commission has published the draft agenda last week of the first meeting of the Group of Member State experts on Investor Citizenship and Residence Schemes in the EU.
Commission invited the Member States to introduce the new developments they may have on investor schemes since the publication of the report. The member states explained their positions on security checks and tax mitigation policies applicable to their CBI and RBI schemes, running in the respective member states.
The Commission suggested the risk of tax evasion could be mitigated via full transparency about the documents issued under investor schemes.  The European Commission stressed that investor schemes are explicitly mentioned in the 5th Anti-money Laundering Directive (AMLD). Whenever obliged entities in the meaning of the Directive have knowledge that an account is being opened or that a business relation is being established with a view for the customer to acquire citizenship or residence rights, it will be mandatory for the financial institutions to carry out enhanced customer due diligence.
Bulgaria
Bulgaria(BG) indicated that the Bulgarian Citizenship Act was being amended and that citizenship from investments would be in included in the management program of the BG government for 2017-2021.
Ireland
Ireland (IE) indicated that the country was having an independent review of the immigration system as it affects investors. IE stated that an important check concerned exchanges of information based on the OECD Common Reporting Standard (CRS). IE noted that it was cooperating closely with the two non-EU countries from which most of the applicants for its investor residence scheme originated.
IE was also requiring reports by private due diligence providers, which were paid for by applicants. IE considered these reports to be a useful addition to its own checks.
Greece
Greece (EL) indicated some amendments in the residence by investment scheme had been made: it had aligned its national law with the current Directive on money laundering. In addition, last week a draft on a new investment option (stock market for Greek bonds) was adopted in the EL parliament. Greece stated that it did not have an investor citizenship scheme, only a residence one, and noted that its replies were provisional.
Applications for citizenship by holders of investor residence permits would be subject to the security checks applicable to all applications for naturalisation, including security checks in the national databases as well as in the Schengen Information System (SIS). EL was sceptical about the involvement of private due diligence providers. More information was needed on question 4, including on any relevant case-law by the Court of Justice and whether the relevant information could be found in the SIS.
While EL agreed to enhancing the cooperation and information exchange among Member States in investor schemes, any cooperation should build on existing and already agreed future frameworks.  All information on the Greek investor residence schemes was publicly available. Member States were already required to send migration data to COM. Analysing the impact of the investor scheme on the property market would be difficult. As regards exchanging information, EL underlined that all cooperation on this was under national competence. There was no wish to develop new systems – it was better to develop existing systems of exchange.
Greece explained that their national risk assessment was completed in 2018. No cash is allowed under their scheme.
Cyprus
Cyprus (CY) indicated that it was striving to align with the Directive on money laundering and to mitigate the risks of investor schemes. It gave a list of the recent amendments made to its scheme, in particular: introduction of a limit of 700 citizenships from investor schemes per year; the setting up of a committee of supervision and control; and the introduction of a code of conduct for agents. Majority of checks mentioned were already in place and being carried out in CY.
Poland
Poland (PL) indicated that it did not have special citizenship or residence schemes for investors.
Portugal
Portugal (PT) indicated that it had introduced a mandatory rule in January: the candidate to the investor schemes regime had to identify a fiscal number of the origin country and previous residence. PT noted its general agreement with the security checks presented by COM, most of which are being carried out by Portugal. PT noted its scepticism about involving private due-diligence providers in the process of checking applicants.
PT explained that an entity within the Ministry of Interior is responsible for an annual audit on the whole procedure of granting investor permits. This is an obligation laid down by law. The Immigration and Border Services are responsible for the checks and they liaise with judiciary entities and other entities covered by the AMLD for the databases they do not have access to. There is a manual of procedures, which is publicised and contains all the steps of the process. Figures also are accessible on the website of the Immigration and Borders Services.
PL explained that risk management was in the remit of the Ministry of Interior. Vulnerabilities concern the lack of cooperation between Member States regarding the exchange of information on rejected applicants, lack of clear criteria and lack or monitoring.
Slovakia
Slovakia (SK) indicated it did not have such a programme, only residence provisions for investors.
Malta
Malta (MT) considered that it was better to ask applicants to come to MT to ensure that checks are carried out. MT did not accept applicants from certain third countries or applicants who had previously been denied a visa from a country with which MT had a visa waiver agreement. MT noted that it rejected not only applicants subject to sanctions, but also applicants highly associated with a company subject to sanctions. MT also did not accept applications for persons subject to a US travel ban or persons sentenced to imprisonment of one year or more (or subject to investigations that could result in such a sentence). On question 5, MT argued that existing frameworks of cooperation should be used, such as the VIS.
MT also explained the usefulness of using private due diligence providers in addition to its own checks. MT gave information about the regulator of the Maltese investor citizenship scheme, which published annual reports with, for example, information about the numbers of applications and the regions of the world from which the applicants came. The Maltese governments also published annually all names of people who had acquired Maltese citizenship in the preceding year. The accounts of the Maltese agency in charge of the investor citizenships scheme were public.
On the question of intermediaries, Malta would be updating its law on investor citizenship to make clear the scheme was fully under government responsibility and that the private sector was not involved. On the question of taxation, Malta was in talks with the OECD. Neither the Maltese investor citizenship nor residence schemes confer any tax benefits.
Latvia
Latvia (LV) stated that, according to the rules for its investor residence scheme, applicants could apply both within its territory and from abroad, as the applicable security checks were the same. Where necessary, applicants were asked to come to LV for in-depth interviews. LV supported both options. LV stated that being listed in sanctions lists should result in the rejection of an application. LV noted its hesitation to establish new platform of cooperation due to the additional administrative burden involved. Investors are a low risk category and these are high net worth people. The Latvian scheme had a shrinking number of residences granted last year (80). LV did not think there was a need for such a comprehensive plan.
Spain
Spain has various ministries were involved in the running of its investor residence scheme. There was both inter- ministerial control and judicial control of the administration of the scheme. As regards transparency, data and statistics were collected on the numbers of applications and the country of origin of the permit holders. An annual report was not always published, but information could be provided upon request. Providing an economic impact of the scheme – per economic sector (e.g. in relation to property) – would be very challenging.
Expert Group
The Commission set up a group of experts from the Member States by the end of this year to:
- Look at the specific risks arising from investor citizenship schemes
- Develop a common set of security checks, including risk management processes that take into account security, money-laundering, tax evasion and corruption risks, by the end of 2019; and
- Address the aspects of transparency and good governance with regard to the implementation of both investor citizenship and residence schemes.
The meetings of this group are scheduled for 5 April 2019, 8 July 2019 and 2 October 2019.
The full report of the first meeting is available here
