How UK and EU nations are attracting dirty money?

A damning report by Transparency International and Global Witness have fingered United Kingdom, Spain, Portugal Austria, Bulgaria, Cyprus among European countries at high risk of “exposing the EU to the corrupt and criminal” individuals through their “golden visas scheme”. Writes Adesina Idris

At a time when many European Countries are shutting their doors to migrants and allowing thousands of death in the Mediterranean sea, many of those same countries have deliberately opened their doors with a red carpet to wealthy people with alleged shady backgrounds across the globe

A damning report by Transparency International and Global Witness have fingered United Kingdom, Spain, Portugal Austria, Bulgaria, Cyprus among European countries at high risk of “exposing the EU to the corrupt and criminal” individuals through their “golden visas scheme”.

The joint international report launched in Brussels on Wednesday, 10th October 2018 was of the view that programs run by some European Union countries to sell passports and residency permits to wealthy foreign citizens pose risks of money laundering as some of the schemes are deliberately not properly managed.

The report, titled ‘European Getaway – Inside the Murky World of Golden Visas’ revealed that altogether the EU member states have attracted around €25 billion in foreign direct investment through the golden visa programs

Spain (€976 million), Cyprus (€914 million), Portugal (€670 million) and the UK (€498 million) came out as the top earners when looking at the annual average respectively. Consequently, in the course of the past 10 years, the golden visa scheme of several member states has given the EU more than 6,000 new citizens and around 100,000 new residents, most of them with questionable sources of funds and wealth.

While the price tag for the EU golden visa schemes varies – a residency can cost €250,000 in Greece or Latvia, a passport in Cyprus €2 million or sometimes up to €10 million in Austria – it is especially the small member states that benefit from the schemes.

Three countries specifically stand out in the report. Cyprus has raised €4.8 billion since 2013 with the sales of more than 3,000 passports to controversial figures from Ukraine, Russia and Syria.

Malta raised about €718 million since 2014 while Portugal earned €4 billion with granting over 17,000 residence permits since 2012, with the option of citizenship after 6 years.

A serious risk for EU

The two organizations also said member states apply different criteria and governments do not know all details about who is allowed in.

“Those schemes pose a serious of risks in the member states and the EU as a whole: on the one side, there is the risk of high-risk profile people and corrupt individual criminals entering the EU, and on the other there is the risk of corruption of the states themselves,” Laura Brillaud of Transparency International told reporters in Brussels.

Except for the UK, Cyprus, Ireland and Bulgaria, the countries running those schemes are subject to the Schengen area and the free movement inside the EU.

While Cyprus and Portugal, for example, do not run checks on the applicants’ sources of funds and wealth, Portugal and Malta do check if applicants are the subject of ongoing investigations in other countries.

According to Brillaud, another type of risk is related to the lack of harmonization of standards and practices on EU level: “The ultimate risk is that the EU integrity and EU security is undermined due to the lack of proper governance of the schemes.”

“EU passports and visas are not a commodity. Money should not be the criterion for citizenship and residence rights in the EU,” said Sven Giegold, fiscal spokesperson of the Greens in the European Parliament.

“We need a European law to curb the sale of European citizenship rights and we need to step up the fight against money laundering. The Commission must set minimum standards for these programs and ensure that they comply with all governments offering passports and visas to investors. ”

After receiving complaints that the schemes could compromise EU security, the European Commission has launched an investigation and is expected to publish a citizenship schemes report next month.

How the Golden Visas Scheme Works

According to the report, the idea is simple: governments trade citizenship or residence rights for investment. Arrangements differ from country to country, and requirements may include investment in business, real estate or government bonds.

Over 20 countries or territories currently offer Golden Visa programs worldwide, including 13 in Europe: Austria, Belgium, Bulgaria, Cyprus, Greece, Latvia, Lithuania, Malta, Monaco, Portugal, Spain, Switzerland, and the United Kingdom. Hungary ran a controversial Golden Visa program from 2013 to 2017.

Freedom of movement, tax advantages as well as access to the EU’s single market, legal system, and social services are some of the main selling points for EU member states’ programs.

Not surprisingly, there is a lot of demand. Over the past few years, the Golden Visa market has turned into a multi-billion-euro global phenomenon with price tags varying from country to country, costing anywhere from €250,000 to €10 million.

“We discovered that risky individuals are buying access to the EU, and that these schemes are risking the corruption of the state itself as profit-hungry governments disregard the dangers and enter into a race to the bottom to attract hefty investments.

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,” said Naomi Hirst, senior campaigner at Global Witness

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.”

Any Concerns so far?

Yes. The matter came into focus recently, after Finnish authorities raided a real-estate firm controlled by a Russian businessperson who had purchased Maltese citizenship following suspicions of massive money laundering.

In another example, Hungary issued permits to the family of the Kremlin’s foreign intelligence chief, who is covered by European sanctions.

The report in summary

Finding safe haven through these schemes is simpler than you might think if you have a lot of money to spare. Despite the risks posed by golden visa schemes, several of the governments selling residency and citizenship do not seem to question where applicants’ money comes from. This perhaps contributes to the EU:

Welcoming over 6,000 new citizens and close to 100,000 new residents through golden visas schemes in the last decade.

Attracting around €25 billion in foreign direct investment through golden visas over the last ten years.

While some nations are profiting from the sales of golden visas, all EU citizens take the sizeable hit due to the ethical implications and risks embedded in the current practice. Nonetheless, secrecy continues to obscure even basic information about these schemes and EU citizens do not have the information necessary to decide whether selling residency or citizenship is a risk worth taking.

We have worked with Transparency International to change this, investigating publicly available sources and reaching out to national governments for additional information. In our latest report, we are able to shine some light on the shady situation, revealing a telling though still incomplete picture of the golden visa scheme.

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