Commissioner Věra Jourová
We had a busy day at the College today and I am here with my colleague Dimitri to present the first ever report of the Commission on the investors citizenship and residence schemes operated in the EU. Also commonly referred to as golden passports and golden visas scheme.
Before we go into this, let me briefly mention another decision we took today - namely to designate Japan as an adequate country when it comes to protection of personal data. Our Japanese partners have also adopted their adequacy finding at the same time today.
These mutual adequacy findings will create the biggest area of free and safe flow of data ever created.
They will benefit European citizens who gain strong protection of their personal data in line with EU privacy standards when their data is transferred to Japan. European companies will also benefit from flow of data with this key commercial partner and from privileged access to the 127 million Japanese consumers.
This decision comes at the crucial time where EU and Japan forge strategic partnership on political and economic issues.
This decision will support the EU-Japan trade deal and will help to maximise the opportunities this deal brings to the European exporters and importers. Almost 80% of EU firms exporting to Japan are SMEs and this adequacy decision will make their business cheaper and easier.
This decision is also a testimony to the success of the approach we have taken to international data flows. We will continue to negotiate safe data flows arrangements in a separate track from trade talks, like we are doing now with South Korea.
The protection of personal data is gaining high importance virtually all over the world. The discussions about horizontal privacy laws are ongoing not only in Asia, but also in India, Latin America and recently in the US. I am glad to see that our legislation, the GDPR serves as an inspiration not only for the debates, but also for legislation.
These mutual adequacy findings with Japan are confirmation of this trend and will help us to jointly set a gold standard when it comes to privacy.
Now, coming back to the citizenship and residence scheme report, I would like to first remind you of the political context of this publication.
The events of the last few years were all a reminder of how interconnected the web of crime is. We have to know who is entering the EU. The Panama Papers and money laundering scandals have revealed that tax evasion and money laundering still happen on a large scale. We also have a better understanding that illegal money fuels other illegal activities, including terrorism.
We have to close the entry points for dirty money; once it enters one country, it can circulate freely to others.
All this adds to the feeling of insecurity and unfairness among our citizens.
And in the EU, in the internal market, we are as strong as our weakest link. If you become a citizen in one country, you get access to all others. You become an EU citizen with all the rights this entails.
This is why this issue is relevant for the whole EU.
This Commission has made it a priority to close different loopholes that allow criminals to take advantage of the EU's weakest links. That's why we have updated our anti-money laundering rules and we are vigorously enforcing them; that's why we have proposed to strengthen the anti-money laundering supervision by the European Banking Authority; that's why we have created the European Public Prosecutor's Office. Finally, that's why we have prepared this report.
I have personally invested into understanding in details the citizenship for investment schemes. I have travelled to Malta and Cyprus especially for that purpose; and of course I have been in Bulgaria many times during the presidency.
I wanted to see with my own eyes how those schemes work in practice and give a chance to the countries to convince me that my concerns were wrong.
The report is very factual, based on an in-depth study that looked into details of legislation and practice in all Member States concerned.
Unfortunately, the report confirms some of my initial concerns.
So when it comes to the golden passport schemes we have identified risks related to security, money-laundering, corruption and tax evasion. And we have concerns regarding the governance and lack of transparency in these schemes.
On security, we have realised that the checks in all the countries are not robust enough and there are grey areas that can be abused.
EU governments also don't consult each other on applicants for a golden passport and don't inform each other about rejected applicants.
On anti-money laundering, the schemes are run by bodies that don't have an obligation to check the origin of the funds.
In all three countries, there is no obligation to have any genuine link with the country, like, for instance physically residing in that country.
And the governments are not very transparent on how the schemes are run, including on the number of passports issued by the schemes and the origins of the applicants.
I really don't think it is politically palatable and fair to continue like this. The Commission cannot ban or police these schemes.
With this report, we want to make clear to our governments that they should take the risks created by these schemes seriously and address the loopholes identified in this report.
And we will have concrete, follow-up actions:
We expect more transparency. We will establish a Member States expert group to work on a common set of rules on security checks and on cooperation between Member States on this by end 2019. The group will also look at the good governance and transparency of the schemes, including discuss regular reporting possibilities on the number of applicants, country of origin and number of golden passports or visas granted by countries.
We are also expecting the countries to end the circumvention of the anti-money laundering rules.
The political responsibility is on the governments to act, but we will continue to monitor this issue very closely.
Leaving the fairness of these schemes aside, the report clearly shows that the rules and security checks have to be improved and tightened.
Having a lot of money alone shouldn't give you a free pass to benefit from the EU citizenship.
Now, my colleague Dimitris will explain in more detail the golden visas schemes.
Commissioner Dimitris Avramopoulos
As Věra explained, what we present to you today is the first effort so far in mapping the different investor schemes that exist. The biggest difference between the so-called “golden passports” and “golden visas” is that the first one gives national - and thereby EU - citizenship, while the second allows non-EU citizens to reside legally in a Member State.
Both have a European dimension, but there are differences in competence, scale and variety. As such, the granting of investor residence permits is and remains national competence.
However, a valid residence permit gives such investors not only the right to reside in the Member State in question, but also to travel freely in the European Union and in particular in the Schengen area for short periods.
Secondly, I mentioned scale. In the European Union, there are twenty Member States that operate investor residence schemes. The three countries that operate investor citizenship schemes (Bulgaria,Cyprus and Malta) also have investor residence schemes.
On top of those, 17 others have such schemes: Czechia, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Latvia, Lithuania, Luxembourg, Netherlands, Poland, Portugal, Romania, Slovakia and the United Kingdom.
Thirdly, we observe a great variety in investment options and conditions. Investors from outside the EU can invest in capital, in immovable property, in government bonds, through donation or endowment of an activity contributing to the public good, or a one-time contribution to the State budget.
These options are also not mutually exclusive or exhaustive.
On top of that, a non-financial investment such as the creation of jobs or the contribution to the economy may be required.
In terms of amount, the scale ranges from a very low investment (below EUR 100,000) to a very high investment (over EUR 5 million).
And what investors get in return also greatly varies: while most Member States that apply such schemes offer temporary residence permits which range from 6 months to 1, 2 or 3 years, some offer 4 years, 5 years or even 10 years residence permits.
And this of course means not only that this could provide a fast-track to national citizenship (and thereby EU citizenship), but also EU long-term residence status, where we have clear conditions but also rights.
While we would like to believe that these schemes were not designed to circumvent EU law or generate abuses, we do have similar concerns as with the golden passports regarding security risks, but also money laundering, tax evasion and transparency issues.
For example, Member States are obliged to carry out certain security checks in the Schengen and Visa Information Systems before issuing a visa or residence permit. So, while Member States are fully responsible for the creation and design of these investor residence schemes, they are not off the hook when it comes to certain checks and balances that impact their fellow Member States.
However, there is a lack of available information on the practical implementation as well as discretion in the way Member States approach security concerns.
On top of that, the total number of residence permits granted by Member States is unknown due to a lack of transparency and specific oversight of these schemes. The issuing of residence permits needs careful monitoring, transparency and oversight.
We urgently need reliable statistics on how many people obtain a residency permit through these schemes, and also careful follow-up afterwards.
This is what the expert group that we will set up will help us do.
But more importantly, we will closely monitor wider issues of compliance with EU law raised by these schemes and we will take necessary action, as appropriate. Because a residence permit opens the door to the European Union.
And the EU borders are our common borders, and so we all have a responsibility to ensure they are protected.
Together we are making important progress in building a Europe that protects, by strengthening our borders and closing information gaps.
We will not allow that what we have been working on together for the past years is jeopardised.
Finally, we will also not ignore similar practices in our immediate neighbourhood, where we see that investor citizenship schemes exist in third countries that either are in accession talks or have a visa-free regime with us.
Particularly when it comes to visa-free travel, we would not like to see that certain wealthy individuals simply bypass the regular Schengen visa procedure and the in-depth assessment of individual migratory and security risks it entails.
We will continue to monitor such investor citizenship schemes as part of our accession talks and the visa-suspension mechanism respectively.
I would like to finish by calling on all Member States that have investor residence schemes to take up their responsibility and ensure that they fully respect already existing EU law and avoid any abuses.
Thank you very much for your attention.