EU states warned over bil­lions banked through golden visa schemes

Cam­paign groups say such deals can open doors of Europe to crim­i­nals

The Star (St. Lucia) - Business Week - - FRONT PAGE - MICHAEL PEEL AND MEHREEN KHAN FT COR­RE­SPON­DENTS IN BRUS­SELS

EU states have banked tens of bil­lions of eu­ros in in­vest­ment from “golden visa” schemes that open the door to crim­i­nals even as the bloc takes a hard pub­lic line on cor­rup­tion, two lead­ing anti-graft cam­paign groups have warned

EU states have banked tens of bil­lions of eu­ros in in­vest­ment from “golden visa” schemes that open the door to crim­i­nals even as the bloc takes a hard pub­lic line on cor­rup­tion, two lead­ing anti-graft cam­paign groups have warned.

At least 6,000 pass­ports and al­most 100,000 res­i­dence per­mits have been granted in the past decade un­der pro­grammes that are some­times laxly su­per­vised, ac­cord­ing to re­search pub­lished on Wed­nes­day jointly by Global Wit­ness and Trans­parency In­ter­na­tional.

The pa­per stokes con­cerns that the wide­spread money-for-sta­tus schemes of­fer klep­to­crat cronies and crim­i­nal gangs a foothold in Europe. Brus­sels has said it plans tougher scru­tiny of “cit­i­zen­ship for sale” schemes in eight EU mem­ber states, in­clud­ing Malta and Cyprus.

Naomi Hirst, a se­nior cam­paigner at Global Wit­ness, said: “If you have a lot of money that you ac­quired through du­bi­ous means, se­cur­ing a new place to call home far away from the place you stole from isn’t just ap­peal­ing, it’s sen­si­ble.

“Golden visa schemes of­fer a safe haven from au­thor­i­ties who might be look­ing to seize your stolen as­sets, and the free­dom to travel with­out rais­ing sus­pi­cion.”

The EU’s 28 mem­ber states have won about 25bn Eu­ros of for­eign di­rect in­vest­ment over the past 10 years from schemes that of­fer res­i­dence rights or full cit­i­zen­ship in ex­change, the re­port says. Cyprus has gen­er­ated 4.8bn Eu­ros since 2013 and Malta about 718m Eu­ros since 2014, while Por­tu­gal and the UK ap­pear to earn be­tween 500m Eu­ros and al­most 1bn Eu­ros per year. Spain, Hun­gary, Latvia, Por­tu­gal and the UK have all granted res­i­dence rights in more than 10,000 cases.

Cyprus and Por­tu­gal “do not seem to ques­tion ap­pli­cants’ source of wealth”, while Malta ac­cepts even con­victed crim­i­nals and tar­gets of in­ves­ti­ga­tions in “spe­cial cir­cum­stances”, the re­port al­leges. Suc­cess rates of more than 90 per cent for golden visa can­di­dates in Latvia, Hun­gary and the UK raise fur­ther doubts over how stiff the back­ground checks are in those coun­tries, the cam­paign groups ar­gue.

Coun­tries that of­fer golden visa schemes say they are a source of needed in­vest­ment and are sub­ject to proper due dili­gence checks.

Cases such as the 200bn Eu­ros money laun­der­ing scan­dal at Danske Bank, Den­mark’s big­gest lender, have ex­posed how EU mem­bers have been used as havens for sus­pect money from Rus­sia and other states where cor­rup­tion flour­ishes.

The prob­lem has even deeper roots in the decades-old role played by Euro­pean coun­tries as con­duits for looted money laun­dered through banks, prop­erty and other in­vest­ments by dic­ta­tor­ships from African na­tions and else­where.

The Euro­pean Com­mis­sion will pub­lish a re­port on cit­i­zen­ship schemes next month, fol­low­ing con­cerns that EU gov­ern­ments need to carry out more strin­gent vet­ting for pass­port ap­pli­cants.

Vera Jourova, EU Com­mis­sioner for Jus­tice, told the FT in Au­gust that Brus­sels wanted to pres­sure gov­ern­ments to re­ject ques­tion­able can­di­dates, af­ter re­cent money laun­der­ing scan­dals linked to Rus­sia.

In cases of any doubt, a per­son “should not have the priv­i­lege of cit­i­zen­ship”, Ms Jourova said. “We have no power to ban such a prac­tice but we have an obli­ga­tion to put high re­quire­ments on the mem­ber states to be care­ful. They are grant­ing cit­i­zen­ship for the whole of Europe.”

The com­mis­sion’s re­port will be the first time Brus­sels has scru­ti­nised golden visa schemes.

Coun­tries that of­fer golden visa schemes say they are a source of needed in­vest­ment and are sub­ject to proper due dili­gence checks © Reuters

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