'Golden visa' schemes pose risk to EU security, Brussels to say

Brussels is to warn EU member states that the “golden visa” schemes used by Britain and others to attract the wealthy have exposed the continent to corruption and organised crime.

A report from the the European commission, expected to be published on Wednesday, claims the schemes designed to encourage the super-rich to invest in return for residency rights or citizenship pose a danger to the continent’s security.

The 28 EU member states have earned about €25bn (£22bn) of foreign direct investment in the last decade from a variety of different offers to wealthy people under which investors can secure the right to free movement in the bloc.

Bulgaria, Cyprus and Malta sell citizenship in return for investments ranging between approximately £800,000 and £1.6m, while 20 member states, including those three, offer residence permits for cash. Before her murder, the journalist Daphne Caruana Galizia was investigating an alleged abuse of the scheme in Malta.

Following the poisoning of the former spy Sergei Skripal, the UK Home Office announced it would review 700 golden visas issued to wealthy Russians under its scheme.

The commission, according to a report obtained by Reuters, is to say the cash-for-status offers pose “risks to security, including the possibility of infiltration of non-EU organised crime groups, as well as risks of money laundering, corruption and tax evasion”.

In December, the British government announced it would suspend its tier 1 visa, which provides a fast-track route to settlement for people willing to invest millions in the UK, while new rules were being formulated.

But the government failed to follow through on that pledge, and has not offered any updates on its commitment to reform the system.

Sophie in ’t Veld, a Dutch member of the European parliament, who is the vice-chair of its committee on civil liberties, justice and home affairs, said the EU had been slow to respond to the abuse.

She said: “I welcome the fact the European commission is, albeit belatedly, sounding the alarm. We need a ban on these schemes, which are exploited by organised criminals who often receive limited background checks, and to align rules for acquiring citizenship.

“After all, by acquiring citizenship of an EU member state, you get EU citizenship automatically. Golden visas and passports are essentially state-facilitated corruption and money-laundering schemes.

“While some governments are busy building up a fortress Europe, they are cynically rolling out the red carpet for wealthy foreign criminals, who are then free to circulate freely in our single market. Golden visa schemes are essentially incompatible with free movement within the Schengen area.”

The commission’s report is said to highlight the varying standards across the EU in terms of the background checks on applicants

The EU does not have any competence in the field of investor schemes but it is set to urge governments to adopt common approval criteria and be more transparent about their internal processes.

A long-running court case in Portugal on the alleged abuse of the government’s golden visa scheme led to two people being given suspended sentences and two Chinese nationals fined earlier this month.

Visas had been offered by the government since 2012 to wealthy foreigners willing to invest €500,000 in property, make a capital transfer of €1m or create 10 jobs.

Miguel Macedo, who resigned as interior minister from the then government in November 2014, was among those acquitted of bribery charges.

A Home Office spokesperson said: “The Tier 1 (Investor) visa is not currently suspended, however we remain committed to reforming the route. A further announcement will be made in due course.”