The Passport Black Market: EU Takes Legal Action Against Cyprus and Malta

The European Commission has announced its decision to launch infringement procedures against Cyprus and Malta on October 20th, over the two countries’ immigrant investor programs. More widely referred to as “golden passport” schemes, these programs are seen as a gateway for corruption, money laundering, crime and tax evasion, and threaten the integrity of the European Union.

The announcement came weeks after Al Jazeera’s Investigative Unit revealed how Cypriot authorities and prominent politicians were willing to enable wealthy individuals with criminal records to obtain European passports through the Cyprus Investment Program (CIP), which would allow the person to travel and work freely anywhere within the EU’s 27 member countries. To be granted a Cypriot passport, applicants—largely from Russia, China, and Ukraine—are required to invest at least $2.5 million, often through real estate investments. Since 2013—the year in which Cyprus both went bankrupt and began this program—the country has issued around 4ooo passports, earning more than $8 billion in revenue. Last week, hundreds of protesters gathered in Nicosia, the capital of Cyprus, protesting the exposed corruption.

In a statement announcing the infringement process against Cyprus and Malta, regarding how the scheme turned a European passport and citizenship into a commodity for the super-rich, and potentially the criminal, the European Commission said, “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.”

Eka Rostomashvili, the advocacy and campaign coordinator for Transparency International, stated, “We see that these schemes allow corrupt people -sometimes people who have looted the treasuries of their countries – a safe haven in the EU.” 

Last week the Cypriot Government responded to EU’s legal action with a tweet that it would end its golden passport program as of November 1 but will continue to process pending applications, citing the abuse and exploitation of the program, yet denying any wrongdoing. Also last week, Cypriot parliament speaker Demetris Syllouris and Cypriot MP and real estate developer Christakis Giovanis—both of whom were exposed by Al Jazeera to be key enablers of the scheme—both resigned from their posts.

The Maltese government on the other hand spoke out in defence of the program despite the EU’s legal action, where Prime Minister Robert Abela said, “Had it not been for the contributions from that program, which we are in the process of winding down, we would probably not have been in a position to present a budget of this scale.” Malta’s golden passport program raised €718 million between its start in 2014 and mid-2017, according to the 2018 Global Witness report.

Regarding the responses from both countries, Christian Wigand, spokesperson for the European Commission, stated, “Malta in fact informed the commission that it envisages the prolongation of citizenship for investment, and while Cyprus very recently announced it will end its current scheme as of 1st of November, it will continue to process pending applications.” He further expressed the commission’s concern and discontent, adding that “We understand there are already calls regarding the introduction of new schemes. Such schemes are in violation of E.U. law, and this is why we are launching the infringements today.”

The Commission is also investigating Bulgaria, which runs a similar investor citizenship scheme, and could face similar legal action accordingly.

Cyprus and Malta now have two months to respond to the European Commission’s notice. If the responses are not satisfactory, both governments could be referred to the European Court of Justice by the commission and ultimately be liable for financial penalties.