There is a tendency for some individuals to abuse the Golden Visa programs as they can weaken the fight against corruption in the European Union.
According to Transparency International, an anti-corruption overseer, these golden Visa schemes which are aimed at offering investors with citizenship and residence permit is subjected to abuse and has the power to destabilize the corruption fight as well as escalate the money laundering risks. Transparency International, in a statement on its website on Monday, is imploring the European Union to keep a close eye on these arrangements and ensure the uprightness of the European borders against the unethical and their possessions.
The announcement by Transparency International was an aftermath of the statement released by the Organized Crime and Corruption Reporting Project (OCCRP), which confirmed that close allies of Russia’s President Vladimir Putin and former President Boris Yeltsin and individuals of the ruling class in Angola are major beneficiaries of this scheme.
Correspondents from the OCCRP probed the activities of the Golden Visa schemes in seven member states of the European Union such as Malta, Portugal, Lithuania, Cyprus, Austria, Hungary, and Latvia including two other non-European member states such as Montenegro and Armenia. According to investigations, some European nations are selling entrance to the Schengen visa-free travel region with little attention paid to due diligence, openness and scrutiny.
For instance, the due diligence measures in European nations such as Portugal and Hungary are not firm. According to Casey Kelso, an advocacy director at the Transparency International said that residency and citizenship are crucial assets that can be given to a person, but most of the European member states have not been using the necessary assessments that banks are expected to apply for the verification of their clients with high net-worth.
For instance, Cyprus golden visa scheme which is not a part of the Schengen region has continually been under fire for its citizenship-by-investment scheme which offers investors the citizenship of the country once they can provide an investment fee of €2m. The existing plan which has been in existence since 2014 has been continuously modified as the initial investment requirement fee was €5m and it also stipulated that each applicant must have an unblemished criminal record.
In her chat with OCCRP, Ana Gomes who is a member of the European Parliament pronounced the scheme offered by Cyprus as utterly awkward, dishonest and increasingly frightening as the program has deviated from its goals which were to provide support after the occurrence of the financial misfortune of 2013. In 2014, the Golden Visa program had been condemned by the European Parliament and even mentioned the case of Malta as a scenario of an outright sale of citizenship. The Parliament also suggested that the European Commission to give out proposals to the member states as they indicated that the nationality of the European Union must never be an item offered for sale. The details of the scheme are shrouded in secrecy around the receivers of the Golden Visas in all the eight European countries.
The sources of wealth of the Golden Visa beneficiaries are not duly verified, and the details of the investments and the major beneficiaries of the program are unknown to the public. The lack of media and public scrutiny in the Golden Visa program provides former government officials with the chance to evade trial and move their illegally acquired wealth across countries.
For instance, Montenegro which is in currently in talks with the European Union to join as a member has offered citizenship to a former politician in Thailand and Palestine who are presently facing corruption and embezzlement charges. According to the Transparency International, the issue with Hungary is exceptionally peculiar as the proceeds of the Golden Visa Program do not enter into the coffers of the government as the money was traced into the private accounts of individuals. Most of the funds are placed in offshore tax havens that trade in the Golden Visa Bonds of Hungary in the words of Miklós Ligeti, Head of Legal Affairs of the Transparency International.
Susana Coroado, who is the Vice-Chairwoman of the Transparency International in Portugal, opined that Golden Visa schemes expedite the risk of money laundering significantly. Transparency International said the European Commission must pay attention to this disclosure and make sure viable measures are put in place to ensure sustenance of the programs.
According to the chairman of the Cyprus Investment Promotion Agency, (CIPA), Michalis Michael has reiterated the position of the Cyprus Government to introduce stringent procedures and conditions which regulates the activities of the Cypriot Golden Visa program with the addition of a record of related service providers as ordered by the cabinet in January.
However, the modified program will not be more open than the existing scheme, which only offers for the publication of notifications by applicants in the Cypriot press. In the last ten years, Cyprus has issued 1,685 passports to investors and 1,651 passports to members of their families with a total profit of €4.5bn plus.