Have Golden passports lost their shine? Is the CBI bubble about to burst? It appears doors are fast closing for citizenship by investment programs by 2025.
The CBI bubble picked up mainstream attention since 2010. Over the years golden citizenship schemes have received criticism and negative publicity. Global political events such as Russia-Ukraine war had a profound effect on citizenship by investment (CBi) programs adding more fuel to fire with increased pressure from US, Canada and EU to shut down such schemes. The European commission has criticized the golden passports sold to rich russian oligarchs, saying EU values not for sale.
Twelve EU countries currently operate residence by investment schemes. The minimum investment levels range from €60,000 to €1,250,000. A study has estimated that more than 130,000 people have obtained residence or citizenship in EU countries via these schemes with the total investment estimated at €21.4 billion from 2011 to 2019.
So far, member states such as Bulgaria, Cyprus already passed legislation to end golden citizenship schemes. The United Kingdom, Latvia have announced closure of golden visa schemes.
The European Parliament adopted on 9 March 2022 a report with proposals to the Commission on citizenship and residence by investment schemes, in which it calls for fully phasing out investor citizenship schemes across the Member States and for strictly regulating different aspects of investor residence schemes.
Limiting Golden citizenship programs
EU proposals call for shutting down all CBI schemes including operated by third countries by gradually phasing them about by 2025. The Citizenship by investment (CBI) schemes, under which third country nationals obtain citizenship rights in exchange for a sum of money, undermine the essence of EU citizenship. The report proposes an EU-level tax on the revenues Member States generate with the schemes, as well as the improvement of EU legislation on anti-money laundering to close any potential loopholes.
The EU proposals has also list imposing short stay visa waiver suspension on third countries operating investor citizenship schemes with Vanuatu becoming the first victim. The Visa waiver agreement to visit Schengen area to all Vanuatu passport holders issued from 2015 is already active. The Commission is closely scrutinising investor citizenship schemes of third countries that could be used to circumvent the EU short-stay visa procedure
Golden Visa Regulations
The European Parliament asks for EU rules to help tackle money laundering, corruption, and tax evasion, including:
- stringent background checks (also on applicants’ family members and on sources of funds), mandatory checks against EU databases, and vetting procedures in third countries;
- reporting obligations for member states, including a “notification and consultation” scheme to allow other member states to object; and
- requirements for minimum physical residence (for applicants) and active involvement, quality, added value, and contribution to the economy (for their investments).
Russia’s invasion on Ukraine
War is a game changer making the widespread abuse of golden citizenship schemes
Some Russian or Belarusian nationals who are subject to sanctions or are significantly supporting the war in Ukraine might have acquired EU citizenship or privileged access to the EU, including to travel freely in the Schengen area. The issuance of residence permits under investor residence/citizenship schemes to all Russian and Belarusian nationals.
Commissioner for Justice and Consumers, Didier Reynders, said: “European values are not for sale. We consider that the sale of citizenship through ‘golden passports’ is illegal under EU law and poses serious risks to our security. It opens the door to corruption, money laundering and tax avoidance. ”
No Travel for Traffickers Act
The US has also joined the party opposing golden passport programs. Reps. Burgess Owens (UT-04) and Steve Cohen (TN-09) introduced the No Travel for Traffickers Act, bipartisan legislation to revoke a country’s eligibility for the U.S. Visa Waiver Program if they participate in citizenship-by-investment, the practice of selling passports in exchange for economic investment.
The No Travel for Traffickers Act would:
- Ban participation of countries that sell passports from participation in the U.S. Visa Waiver Program.
- Mandate that the Executive Branch list publicly all countries with citizenship-by-investment or “Golden Passport” programs.
- Direct the Executive Branch to cooperate with the United Kingdom and the European Union to eliminate Schengen area visa-free travel for countries that sell passports.
- Prohibit the use of U.S. taxpayer funds to vet “golden passport” applicants so taxpayer dollars cannot be used to enable these corrupt programs.