The European Parliament is likely to vote for a call to ban on citizen-by-investment schemes on Wednesday, as lead rapporteur Sophie Int’ Veld labelled Malta's scheme as "unfair to European and Ukrainian citizens".

Addressing a press conference in Strasbourg, ahead of the vote, MEP Sophie In 't Veld said that while it might be legally difficult to stop member states from operating such schemes, the European Commission should try to find ways to do so. 

"These schemes are letting in very unsavoury and shady individuals. Is it unfair to ask Malta to scrap the scheme? I don’t know. Is it fair for Malta, or other countries, to create that risk to the EU? I don’t think so. [It's] very difficult for small countries whose revenue streams depend on this... I understand it is painful but it is not fair to European citizens, and Ukrainians at this point," the MEP, who serves as rapporteur on the issue, said. 

The European Parliament is expected to call for a ban of citizenship by investment (CBI) schemes and EU-wide rules for residence by investment (RBI) schemes.

Again pointing specifically to Malta, In 't Veld said the Maltese government's decision to suspend the processing of applications by Russians because of the country's invasion of Russia, confirmed the schemes are problematic. 

"It has been acknowledged by the Maltese government themselves because it has suspended the scheme [for Russians].

"We should not only stop the processing of new applications but also look at those already granted. We have to rely on the Russian authorities to provide us with information for due diligence, how do we trust the information? Every effort should be made to ensure that Russian oligarchs do not benefit from golden passports," she said. 

In a dramatic change of stance last week, after initially defending the scheme and saying it is "not a golden passport scheme", the government announced that because of the "recent developments" - a reference to the Russian invasion of Ukraine - the necessary due diligence checks cannot be carried out effectively. 

Prime Minister Robert Abela later argued that the decision was not a u-turn but instead served as proof that the authorities are serious about their due diligence. 

But In 't Veld was adamant this is not the case: "[These schemes are] highly problematic and it is complete fiction that they are sound. They are attracting corruption, facilitate corruption and background checks are a laugh."

When asked about the government's claim that the island's cash-for-passport scheme is not a golden passport scheme, the MEP said she finds the comment "fairly puzzling". 

"The official term is citizenship by investment, if you invest you get citizenship... it’s a golden passport. The obligation to physically reside in a country in principle comes with that but that does not determine whether it is a golden passport and we know that the Maltese scheme is a golden passport scheme.” 

What happens next?

MEPs are set to approve a report that will put forward a number of proposals to the European Commission. The results are expected at around 7pm on Wednesday. 

The European Parliament is calling on the Commission to: 

- submit, before the end of its current mandate, a proposal for a regulation that would comprehensively regulate various aspects of RBI schemes with the aim of harmonising standards and procedures and strengthening the fight against organised crime, money laundering, corruption and tax evasion;

- include in its proposal targeted revisions of existing Union legal acts that could help to dissuade member states from establishing harmful RBI schemes by strengthening legal acts in the field of anti-money laundering and by strengthening relevant provisions in the long-term residence directive.

The MEPs also called on Commission president Ursula Von der Leyen to honour her pledge of following Parliament's reports up with legislation

"The Commission has a duty to act. The war with Ukraine has again put the issue under the spotlight. Dear Commission, don’t waste any time and implement this," the MEPs said. 

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