The European commission has cited golden passport schemes pose several serious security risks for Union citizens, such as those stemming from money-laundering and corruption;
The EC considers that the lack of common standards and harmonised rules governing schemes granting residence on the basis of a financial investment (RBI schemes) may also pose such security risks, affect the free movement of persons within the Schengen area and contribute to undermining the integrity of the Union
The risk stems from third countries that have CBI schemes and that benefit from visa-free travel to the Union because third-country nationals can purchase citizenship of those third countries with the sole purpose of being able to enter the Union without any additional screening
CBI schemes undermine the essence of Union citizenship, which represents one of the foremost achievements of Union integration, granting a unique and fundamental status to Union citizens and including the right to vote in European and local elections;
Poor security checks
lack of comprehensive security checks, vetting procedures and due diligence in Member States that have CBI/RBI schemes in place; notes that Member States do not always consult the available Union databases or exchange information on the outcome of such checks and procedures, allowing for successive applications for CBI/RBI schemes across the Union;
Third party checks
Member States’ authorities must have in place adequate processes for vetting CBI/RBI applicants as granting residency and citizenship rights is the responsibility of the State and Member States’ authorities must not rely on background checks and due diligence procedures carried out by intermediaries and other non-state actors, although Member States may use relevant information from independent non-state actors; expresses concern regarding some Member States where applications for citizenship were reported to be accepted even where the applicants do not meet the security requirements;
No Intergovernmental approach
the Group of Experts on Investor Citizenship and Residence Schemes, composed of Member State representatives, has not agreed on a common set of security checks as it was mandated to do by the end of 2019; finds that that failure to agree on a common set of security checks shows the limits of adopting an intergovernmental approach as regards the matter and underlines the need for Union action;
Name change
Many third countries to allow their citizens to change their name poses a risk because third-country nationals could acquire citizenship of a third country under a CBI scheme and then change their name and enter the Union under that new name;
Family members
Applications under CBI/RBI schemes are particularly difficult to monitor and assess where they concern joint applications that include different family members; notes that under certain national RBI schemes residency rights may be granted based on family, personal or other ties to the main applicants; notes that family reunification rights under the Family Reunification Directive apply after obtaining residency status in a Member State, thus allowing family members to enter the Union without further specific checks normally required under RBI schemes;
Bad faith applicants
Residency requirements to qualify under the RBI/CBI schemes of Member States do not always include continuous and effective physical presence and are difficult to monitor, thereby potentially attracting bad faith applicants who purchase national citizenship purely for the access it grants to the Union territory and its internal market without any attachment to the Member State in question;Â
New Proposals
The Commission proposes to regulate various aspects of RBI schemes with the aim of harmonising standards and procedures and strengthening the fight against organised crime, money laundering, corruption and tax evasion, covering, inter alia, the following elements:
(a) increased due diligence and rigorous background checks of the applicants and, where necessary, their family members, including the sources of their funds, mandatory checks against the Union large-scale justice and home affairs IT systems and vetting procedures in third countries;
(b) the regulation, proper certification and scrutiny of intermediaries as well as limitation of their activities and, in the case of CBI schemes, the cessation of their services;
(c) harmonised rules and obligations on Member States to report to the Commission regarding their RBI schemes and applications thereunder;
(d) minimum physical residence requirements and minimum active involvement in the investment, quality of investment, added value and contribution to the economy as conditions for acquiring residence under RBI schemes;
(e) a monitoring mechanism for the ex post control of successful applicants’ continued compliance with the legal requirements of RBI schemes;
The full list of proposals is available here
