Investigation finds alleged loopholes in Malta ‘golden passport’ scheme

A JOINT INVESTIGATION BY Maltese and British reporters has found alleged loopholes that allow wealthy individuals from the Middle East, Asia and elsewhere to acquire European Union passports with minimum effort, in exchange for cash. The investigation concerns the so-called “cash for passports” scheme, which was launched by the government of Malta in 2014.

The scheme allows foreign nationals with no family connection to the island country to acquire a Maltese passport, if they invest €600,000 ($720,000) in Malta and purchase a residential property worth at least €700,000. Alternatively, they can sign a five-year lease on a residential property and donate €10,000 to charity. They then need to live in Malta for three years before they can claim citizenship in the European Union nation. However, the residential period can be reduced to one year if they invest €750,000 instead of €600,000 in the island country.

The scheme has proven lucrative in the past. In the 12 months leading to mid-2018 alone, Malta raised over €162 million, which was equivalent to 1.4% of its gross domestic product. Maltese officials have stated that, during the COVID-19 pandemic, income from the so-called “golden passports” scheme has helped keep the country’s economy afloat. But the European Union has called on Malta, Cyprus, Bulgaria, and other member states to stop their cash-for-passports schemes, because they pose serious security issues and can attract corrupt individuals with an interest in tax evasion and money-laundering.

Now a joint probe by British newspaper The Guardian and several Maltese investigative groups, including the Daphne Caruana Galizia Foundation, has uncovered alleged evidence of legal loopholes in Malta’s scheme. The alleged loopholes implicate Henley & Partners, a British-based firm that operates Matla’s a passport sales program. The firm describes itself as a “global citizenship and residence advisory firm”, and advises governments around the world on how to design and implement economic citizenship schemes.

The investigation was based on leaked documents and “thousands of emails” about the scheme. The emails and leaks reveal the existence of loopholes that allow wealthy investors to spend an average of 16 days in Malta, rather than a minimum of a year, before being awarded citizenship. The BBC reported on the case of an individual from the United Arab Emirates, who received Maltese citizenship after spending just nine hours on the island country. Other wealthy investors acquire Maltese citizenship by rending empty residential properties, or even yachts.

In a statement, the London-based Henley & Partners said it is “fully aware of the potential inherent risks in handling client applications for residence and citizenship” in Malta, and that its staff are “committed to due diligence”. It added, however, that “ultimately it is the responsibility of the countries involved [in passport-for-cash schemes] to investigate and vet applicants”.

► Author: Joseph Fitsanakis | Date: 23 April 2021 | Permalink