The money laundering risk of Golden Passports

By Christina Poursanidou, Lawyer

Following the financial crisis of 2009, most of the European countries in order to boost their weakened economies, have introduced policies, which allow foreign investors to make large and passive investments, in exchange of an easy (almost immediate) route to citizenship or residence of the investors. Such schemes are definitely not a new trend, since even from the 1980s UK and USA offered residence in exchange for sizable investments. Usually these policies are defined as Citizenship by Investment (CBI) or  Residency by Investment (RBI), “Golden Visas” or “Golden passports”. Undoubtedly,  such policies have a positive impact on the introducing country, but simultaneously could carry significant risk of economic crime.
At that point, let’s discuss the intentions of the parties. On the one hand, the country introducing a golden passport policy aims at its economic growth. Basically, the country offers a passport in order to receive a huge investment from wealthy foreigners. On the other hand, the intentions of the foreign investors vary. According to the recent survey,  EU Member States are ranked in the top 30 most desirable citizenships around the world.  The reasons behind the decision to invest in any of the EU countries include political stability and the legal system of these countries as well as tax incentives. Although, the most important element, making the nationality of an EU member state desirable by third country nationals are the rights provided by the EU, such as the freedom of movement, live, work and study with no restrictions in other 26 countries. Although increased foreign investments are always welcome, there has been overwhelming evidence that golden passport schemes have been more likely serving corrupt interests, rather than the common good.
Schemes offering golden passports, if not handled with caution by the authorities, have been proved vulnerable to a number of risks. Apart from the “marketisation” of EU residency and the significant macroeconomic implications, the CBI/RBI policies can help hide or facilitate financial crimes, including bribery and corruption, tax crimes and money-laundering. Some elements leading to that conclusion is the lack of transparency of the procedures,  insufficient measures to verify applicants’ background and the origins of the invested funds, opaque governance structures and the involvement of intermediaries. The successful applications for golden passports of individuals, being accused for financial crimes, is the irrefutable proof of the risk for EU security from CBI/RBI policies.
Based on the above concerns, the European Commission has urged member states to ensure that applicants for “golden passports” and “golden visas” comply with EU anti-money laundering rules  and to apply enhanced customer due diligence check.  We can admit that the steps taken to fight the risk for AML from golden passports are important. Although, the conflicting interests of the introducing countries still remain the biggest obstacle to eliminate the risk of such policies: Economic growth of a country vs the attempt to combat money laundering within the EU.
Read more articles by Christina Poursanidou here

Comments

Post a Comment

Popular posts from this blog

Ombudsman inquiry on Commission President’s text messages is a wake-up call for EU

Image
The European Ombudsman inquiry into the Commission’s handling of a request for text messages between its President and the CEO of a pharmaceutical company is a wake-up call for all EU institutions about ensuring accountability in an era of instant messaging. One year after the initial request by a journalist, the Commission has still not clarified whether messages reported to concern major vaccine procurement deals exist and whether the public is entitled to see them. The Ombudsman had asked the Commission, in a finding of maladministration in January, to conduct a more thorough search for the text messages. The Commission’s recent response failed to say whether it had looked directly and correctly for the text messages and if not, why not. While the response recognised that work-related text messages can be EU documents, it reiterated that the Commission’s internal policy is, in effect, not to register text messages. The Ombudsman has closed  the inquiry  and upheld...
Read more

The “Green Maze”: Environmental Obligations for Cement Companies in Greece and Cyprus

Image
Written by Efi Thoma * The cement industry plays a crucial role in the infrastructure development of both Greece and Cyprus. However, this essential sector also carries a significant environmental footprint. From quarrying raw materials to the energy-intensive production process, cement companies face increasing scrutiny and stringent legal obligations aimed at mitigating their impact on the environment. This article delves into the key environmental issues and the pertinent legal frameworks in Greece and Cyprus that cement manufacturers must navigate. Both Greece and Cyprus, as members of the European Union, are bound by a substantial body of EU environmental law. This includes cornerstone directives such as the Environmental Impact Assessment (EIA) Directive, the Industrial Emissions Directive (IED), the Waste Framework Directive, and legislation addressing climate change and biodiversity. These EU regulations are transposed into national law in both countries, forming the bedrock ...
Read more

Air passenger rights: A boarding pass may be sufficient to prove a confirmed reservation on a flight

Image
According to the Judgment of the European Court of Justice in Case C-20/24, a boarding pass may be sufficient to prove a confirmed reservation on a flight. Payment by a third party of the price of the package tour, including a flight, does not exclude the right to compensation in the event of long delay of a flight.  An air carrier offering charter flights concluded a contract with a tour operator. Under that contract, the carrier operated, on specific dates, flights for which that tour operator, after paying for the flights, sold tickets to air passengers. Two air passengers participated in a package tour, including a flight from Tenerife to Warsaw, the arrival of which was delayed by more than 22 hours. The contract relating to the package tour was concluded between a third company, on behalf of those passengers, and that tour operator. The passengers concerned claimed compensation from the air carrier under EU law. [1]  The latter refused to pay that compensation. It argued...
Read more

The first international convention on protecting lawyers adopted by the Council of Europe

Image
The Council of Europe has adopted the first-ever international treaty aiming to protect the profession of lawyer. This is to respond to increasing reports of attacks on the practice of the profession, whether in the form of harassment, threats or attacks, or interference with the exercise of professional duties (for example, obstacles to access to clients). Lawyers play a key role in upholding the rule of law and securing access to justice for all, including to vindicate possible human rights violations. Therefore, public confidence in justice systems also depends on the role played by lawyers. The  Council of Europe Convention for the Protection of the Profession of Lawyer  covers lawyers and their professional associations, whose role is vital in defending lawyers’ rights and interests as a profession. The Convention addresses entitlement to practise, professional rights, freedom of expression, professional discipline and specific protective measures for lawyer...
Read more

Status of long-term resident in Cyprus: Appeal against the rejection decision

Image
By Giorgos Kazoleas, Lawyer in Cyprus Third-country nationals residing in areas controlled by the Government of the Republic legally and continuously for the last five years prior to the submission of the application and holding a valid residence permit in the Republic can apply along with the required original documents in order to obtain the status of long-term resident in Cyprus. It often happens that the Administration (in this case the Immigration Department) does not properly assess the facts and circumstances of the applicant and does not properly check the requirement for obtaining the status, resulting in a rejection decision. This decision is notified to the applicant and must contain clear justification for the reasons for the rejection of the application. It must also state that the applicant has the right to appeal against the rejection decision within 75 days from the notification of the decision. According to the Aliens and Immigration Law, [1]   in order to...
Read more