Updated 7pm with PM reaction

Brussels has taken the first step in the road to legal proceedings against Malta over its new cash-for-passports scheme.  

In an announcement on Wednesday, the European Commission said it had decided to send Malta what is known as a letter of formal notice - the first step that could end in Malta being hauled before the European Courts of Justice.  

Brussels believes that by selling EU passports, Malta departs from the common basic understanding that nationality is the expression of a special relationship of allegiance, solidarity and a genuine link between the state and its people.

Malta has now been given two months to take all measures necessary to address the Commission's concerns.

If the government's reply is unsatisfactory, the Commission could take the next step and issue a 'reasoned opinion' before finally taking Malta to the EU's court. 

The Commission is also taking similar steps against Cyprus. 

"While Cyprus and Malta remain responsible to decide who may become Cypriot and Maltese, the Court of Justice has made it clear on multiple occasions that rules on the acquisition of the nationality of a Member State must do so having 'due regard to EU law'," the Commission said. 

In a reaction, the Malta government said it wanted to 'firmly' reiterate that citizenship is a member state national competence and it should remain as such.

"Nonetheless, the government will analyse the contents of the correspondence received and is willing to carry on partaking in constructive dialogue with the European Commission. Observations will be communicated to the European Commission in due course," it said.

Prime Minister Robert Abela later struck a conciliatory tone, saying Malta was not going to "stamp our feet" with the EU.

“What we want to communicate is that our system of checks and balances for this program is robust and it is not a program that lets a ton of applicants who should have never been approved in," he said. "Our percentage of rejected applications speaks for itself," repeating claims that 40 per cent of applicants are rejected. 

He said Malta's program had been amended to strengthen due diligence.

Malta 'willing to defend scheme'

Malta had already said it is willing to defend the program before the EU courts if needs be. 

Malta’s scheme, launched in 2014, generated €1.5 billion over six years.

In 2019, the European Commission identified golden passport schemes as raising the risk of possible infiltration of non-EU organised crime groups, as well as money laundering, corruption and tax evasion possibilities.

The so-called Individual Investor Program, has been replaced with a new scheme whereby applicants who invest €750,000 will be able to apply for citizenship after one year of residency. Applicants who invest €600,000 can apply after three years of residency.

There is no minimum number of days that they would have to spend in Malta, but the authorities will make sure they live here for "a number of weeks”. 

Commission's reservations over new scheme

On Wednesday, the Commission acknowledged that a new Maltese citizenship-by-investment scheme was launched towards the end of 2020, and that the previous scheme is no longer in force. 

However, the Commission said it still has reservations.  

European Commission President Ursula Von der Leyen set her sights on passports sales during her state of the European Union speech in September, insisting “European values are not for sale”.

Malta’s scheme was mired in controversy from the very beginning. 

In April, an investigation carried out by Times of Malta as part of the Passport Papers project exposed how much of the scheme’s mandatory residency requirements were a sham. 

The project was part of the Investigative Journalism for Europe (IJ4EU) fund and coordinated by the Daphne Caruana Galizia foundation. 

Last year Times of Malta reported how a rogue state spy had used the program to sneak into Europe. 

Government's irresponsible behaviour - PN

In a statement, the PN said it had been appealing to the government to be cautious, transparent and serious and to follow a rigorous process when it came to citizenship for years.

It said it had been saying that the scheme as implemented had destroyed Malta’s reputation and led to people without any genuine link to Malta being given citizenship. The country was now suffering the consequences of this irresponsible behaviour.

It said it agreed with a transparent process based on meritocracy for applications meeting pertinent criteria, commiti It committed itself to implement a transparent process removing secrecy on the identity of applicants and committed itself to a rigorous process that would be carried out by the competent authorities.

It said it would also ensure there is a genuine link between applicants and the country.