EU investigation into ‘golden passports’ reveals money laundering, tax evasion concerns
29 Jan 2019

The European Commission has urged member states to ensure that applicants for investor citizenship and residency, dubbed golden passports and golden visas respectively, comply with EU anti-money laundering rules after a new study revealed financial crime risks associated with the schemes.

The ‘comprehensive’ study identified the existing practices and risks the schemes imply for the EU, in particular regarding security, money laundering, tax evasion and corruption.

There exists a lack of transparency in how the schemes are operated and a lack of cooperation among member states further exacerbates these risks, the probe found.

Regarding golden passports, currently three EU member states operate schemes that grant investors nationality which are ‘less strict than ordinary naturalisation regimes.’

The EC report found that [security] checks run on applicants are not sufficiently robust. It said enhanced checks – ‘due diligence’ – are necessary to ensure that rules on anti-money laundering are not circumvented, and added that monitoring and reporting is necessary to make sure that individuals do not take advantage of these schemes to benefit from privileged tax rules.

“The report maps the existing practices and identifies certain risks such schemes imply for the EU, in particular, as regards security, money laundering, tax evasion and corruption. A lack of transparency in how the schemes are operated and a lack of cooperation among Member States further exacerbate these risks, the report finds,” the EC said in a statement.

“In addition, Member States do not exchange information on applicants for such schemes, nor do they inform each other of rejected applicants.”

Regarding golden visas, currently 20 EU member states run such schemes which gives a third-country national the right to reside in the member state in question, but also to travel freely in the Schengen area.

While different from citizenship schemes in the rights they grant, the visas ‘pose equally serious security risks to Member States and the EU as a whole,’ the EC said.

“There are certain security obligations under EU law that must be carried out before issuing a visa or residence permit to foreign investors. However, there is a lack of available information on the practical implementation and discretion in the way that Member States approach security concerns.”

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