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EUROPEAN UNION

‘Shady characters’: Will EU countries now put an end to ‘golden passport’ schemes?

Since Russia's invasion of Ukraine European countries are coming under pressure to end backdoor routes to EU citizenship which are deemed to be unfair and "shady". This week MEPs in the European parliament made their opinions on the scheme clear.

'Shady characters': Will EU countries now put an end to 'golden passport' schemes?
A picture taken on February 14 , 2022 shows national flags of European Union's member countries at the European Parliament in Strasbourg, France. (Photo by FREDERICK FLORIN / AFP)

The European Parliament on Wednesday called for the phasing out of citizenship by investment programmes operated by some EU countries and for EU-wide regulation on so-called ‘golden visas’ offered to wealthy individuals. 

Such schemes pose a threat to European security and democracy as they can be used “as a backdoor” to the EU for “dirty money”, MEPs argued during the debate.

Members of the European Parliament have been calling for the termination of ‘golden passport’ schemes since 2014, but the issue has become more prominent in the context of Russia’s invasion of Ukraine, because of the number of Russian citizens acquiring rights in EU countries through this route in recent years. 

The resolution passed by the parliament with 595 votes to 12 and 74 abstentions says golden passports should be phased out fully. 

The background…

The market of golden passports and visas developed rapidly since the 2008 financial crisis, as countries have sought to incentivise foreign investment

Three EU countries – Bulgaria, Cyprus and Malta – offer citizenship in exchange for a financial investment. Currently, however, Bulgaria is considering a government proposal to end the scheme, Cyprus is only processing applications submitted before November 2020, and Malta has just suspended the processing of applications from Russian citizens.

In addition, 12 EU countries (Cyprus, Estonia, Greece, Spain, Hungary, Ireland, Italy, Latvia, Luxembourg, Malta, the Netherlands and Portugal) grant residence permits on the basis of investments, the so-called ‘golden visas’. 

Each national scheme has different rules regarding minimum investment requirements, which range between €60,000 in Latvia and €1.25 million in the Netherlands. These can be through property ownership or contributions to public projects. 

A European parliament study estimates that, from 2011 to 2019, the total investment associated to these schemes has been of €21.4 billion. 42,180 citizenship or residence applications have been approved under such programmes and more than 132,000 people have benefited, including family members of applicants. 

Dutch MEP Sophie IN’t Veld, the European parliament rapporteur, said that “when governments are selling passports or visas, what is actually bringing in the cash is… the little blue and yellow logo on them” – in other words, the EU flag.

‘They are designed for shady business, shady money and shady characters’

Getting citizenship of one EU country of course means the freedom to live and work in all 27 member states, so one country’s passport policy affects everyone in the Bloc. 

Benefits include the right to move to other EU countries, exercise economic activities in the single market, vote and stand as candidates in local and European elections, receive consular protection outside the EU and travel visa-free in many other states around the world. 

Residence also ensures economic rights and the possibility to be joined by family members. 

All this bypassing standard citizenship requirements, which typically involve a period of residence and a “genuine connection” to the country, such as family links, or integration conditions, such as speaking the language and knowing the culture. 

“Passports and golden visa schemes are not about attracting any meaningful legitimate investment in the real economy of Europe. They are designed for shady business, shady money and shady characters,” Sophie IN’t Veld said during the debate.

A picture taken on March 8, 2022 shows European Union’s and Ukrainian flags fluttering outside the European Parliament in Strasbourg, eastern France. (Photo by Frederick FLORIN / AFP)

Security risks

In an earlier analysis, the European Commission found that such programmes pose risks regarding security, money laundering, tax evasion and corruption due to weak vetting procedures. 

For instance, EU countries offering citizenship by investment usually request clean criminal records from applicants or their country of origin, which are difficult to verify especially in case of a conflict. But Malta can waive the requirement “where the competent authority considers such a certificate impossible to obtain”. 

Cyprus, which is not part of the border-free Schengen area, is not connected to the Schengen Information System that allows member countries to share security information.

In addition, EU member states consult on applications for short-stay visas issued to citizens from certain third countries, but they do not consult for citizenship by investment programmes and do not inform each other of rejected applications, the Commission noted.

Media investigations also highlighted how the schemes have been linked to corruption and crime. Journalist Daphne Caruana Galizia was murdered in Malta in 2017 following her investigations into corrupt politicians and money laundering through the citizenship by investment programme, MEPs reminded. 

Brexit-backing billionaire Christopher Chandler, born in New Zealand, was reported to have acquired EU citizenship using the Maltese scheme in 2016.

In 2021 Cyprus revoked the citizenship of 39 foreign investors and 6 members of their families, after it emerged that insufficient background checks had been carried out for over half of the 6,779 passports issued under the scheme between 2007 and 2020. 

‘It is not fair to Ukrainians at this point’

The parliament said on Wednesday that these schemes are “discriminatory and lack fairness” as they contrast “dramatically with the obstacles to seeking international protection, legally migrating or seeking naturalisation through conventional channels”. 

MEPs also called on the European Commission to propose, in 2022, EU-wide regulation on residence by investment schemes. These should include stricter background checks on applicants, their family members and the sources of their funds, minimum residence requirements, investments that truly benefit the economy of the country, and proper scrutiny of intermediaries helping people acquiring rights trough these channels.

“It should not be enough to just buy a house or a villa. The investment must be in the real economy and in line with the climate and social objectives of the Union,” said Sophie IN’t Veld. 

It is “very difficult for small countries whose revenue streams depend on this… I understand it is painful but it is not fair to European citizens, and Ukrainians at this point,” the rapporteur said.

Despite the vote in the European parliament EU powers on this issue remain limited because the rules on the acquisition of citizenship are defined at national level rather than in Brussels. 

The European Commission, however, has already launched a legal action at the European Court of Justice against Cyprus and Malta because “the granting of EU citizenship for pre-determined payments or investments without any genuine link with the member states concerned undermines the essence of EU citizenship”.

What about Russian nationals obtaining golden status?

Russian nationals account for 45 percent of those who have acquired citizenship in EU countries using this route, followed by Chinese nationals and people from the Middle East (15 percent for each group). Chinese investors account for over half of residence permits issued in this way.  

In consideration of Russia’s invasion of Ukraine, the European Parliament also appealed EU countries to stop operating citizenship and residency by investment schemes for Russian nationals with immediate effect and to re-assess whether those who benefited in the past have links to the Putin regime. 

In the first round of sanctions against Russia, the leaders of the European Commission, France, Germany, Italy, the United Kingdom, Canada and the United States committed to “limit the sale of citizenship… that let wealthy Russians connected to the Russian government become citizens… of our countries and gain access to our financial systems.”

This article is published in cooperation with Europe Street News, a news outlet about citizens’ rights in the EU and the UK. 

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TRAVEL NEWS

REVEALED: Countries fear non-EU travellers face delays under new EES border checks

A number of countries in Europe's Schengen area admit they fear delays and insufficient time to test the process ahead of new, more rigorous EU border checks that will be introduced next year, a new document reveals.

REVEALED: Countries fear non-EU travellers face delays under new EES border checks

Schengen countries are tightening up security at the external borders with the introduction of a new digital system (EES) to record the entry and exit of non-EU citizens in May 2023.

The EES will enable the automatic scanning of passports replacing manual stamping by border guards. It will register the person’s name, type of the travel document, biometric data (fingerprints and facial images) and the date and place of entry and exit. The data will be kept in a centralised database on a rolling three-year basis that is re-set at each entry. 

What the EES is intended to do is increase border security, including the enforcement of the 90-day short-stay limit for tourists and visitors.

EU citizens and third-country nationals who reside in a country of the Schengen area will not be subject to such checks as long as they can prove residency in an EU country however they will still be caught up in any delays at passport control if the new system as many fear, causes longer processing times.

READ ALSO: Foreigners living in EU not covered by new EES border checks

But given its scale, the entry into operation of the system has been raising concerns on many fronts, including the readiness of the physical and digital infrastructure, and the time required for border checks, which could subsequently cause massive queues at borders.

A document on the state of preparations was distributed last week by the secretariat of the EU Council (the EU institution representing member states) and published by Statewatch, a non-profit organisation that monitors civil liberties.

The paper contains the responses from 21 countries to a questionnaire about potential impacts on passenger flows, the infrastructure put in place and the possibility of a gradual introduction of the new system over a number of months.

This is what certain the countries have responded. Responses from Denmark, Spain and Sweden do not appear in the report but the answers from other countries will be relevant for readers in those countries.

READ ALSO: What the EU’s new EES border check system means for travel

‘Double processing time’

Austria and Germany are the most vocal in warning that passport processing times will increase when the EES will become operational.

“The additional tasks resulting from the EES regulation will lead to a sharp increase in process times”, which are expected to “double compared to the current situation,” Austrian authorities say. “This will also affect the waiting times at border crossing points (in Austria, the six international airports),” the document continues.

“Furthermore, border control will become more complicated since in addition to the distinction between visa-exempt and visa-required persons, we will also have to differentiate between EES-required and EES-exempt TCN [third country nationals], as well as between registered and unregistered TCN in EES,” Austrian officials note.

Based on an analysis of passenger traffic carried out with the aviation industry, German authorities estimate that checking times will “increase significantly”.

France expects to be ready for the introduction of the EES “in terms of passenger routes, training and national systems,” but admits that “fluidity remains a concern” and “discussions are continuing… to make progress on this point”.

Italy is also “adapting the border operational processes… in order to contain the increased process time and ensure both safety and security”.

“Despite many arguments for the introduction of automated border control systems based on the need for efficiency, the document makes clear that the EES will substantially increase border crossing times,” Statewatch argues.

‘Stable service unlikely by May 2023’

The border infrastructure is also being adapted for collecting and recording the data, with several countries planning for automated checks. So what will change in practice?

France will set up self-service kiosks in airports, where third-country nationals can pre-register their biometric data and personal information before being directed to the booth for verification with the border guard. The same approach will be adopted for visitors arriving by bus, while tablet devices such as iPads will be used for the registration of car passengers at land and sea borders.

Germany also plans to install self-service kiosks at the airports to “pre-capture” biometric data before border checks. But given the little time for testing the full process, German authorities say “a stable working EES system seems to be unlikely in May 2023.”

Austria intends to install self-service kiosks at the airports of Vienna and Salzburg “in the course of 2023”. Later these will be linked to existing e-gates enabling a “fully automated border crossing”. Austrian authorities also explain that airport operators are seeking to provide more space for kiosks and queues, but works will not be completed before the system is operational.

Italy is increasing the “equipment of automated gates in all the main  airport” and plans to install, at least in the first EES phase, about 600 self-service kiosks at the airports of Rome Fiumicino, Milan Malpensa, Venice and in those with “significant volumes of extra-Schengen traffic,” such as Bergamo, Naples, Bologna and Turin.

Switzerland, which is not an EU member but is part of the Schengen area, is also installing self-service kiosks to facilitate the collection of data. Norway, instead, will have “automated camera solutions operated by the border guards”, but will consider self-service options only after the EES is in operation.

Gradual introduction?

One of the possibilities still in consideration is the gradual introduction of the new system. The European Commission has proposed a ‘progressive approach’ that would allow the creation of “incomplete” passenger files for 9 months following the EES entry into operation, and continuing passport stamping for 3 months.

According to the responses, Italy is the only country favourable to this option. For Austria and France this “could result in more confusion for border guards and travellers”. French officials also argue that a lack of biometric data will “present a risk for the security of the Schengen area”.

France suggested to mitigate with “flexibility” the EES impacts in the first months of its entry into service. In particular, France calls for the possibility to not create EES files for third-country nationals who entered the Schengen area before the system becomes operational, leaving this task to when they return later.

This would “significantly ease the pressure” on border guards “during the first three months after entry into service,” French authorities said.

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