'Passports for sale': EU takes legal action against Cyprus and Malta

[October 20, 2020]  BRUSSELS (Reuters) - The European Union's executive said on Tuesday it was launching legal action against Cyprus and Malta over their investor citizenship programmes that are sometimes referred to as "golden passport" schemes.

The European Commission said in a statement that the decision was taken because the two member states granted nationality – and thereby EU citizenship – in exchange for a pre-determined payment or investment and without a genuine link with the country concerned.

"There cannot be a weak link in EU efforts to curb corruption and money laundering. EU passports cannot be for sale," Values and Transparency Commissioner Vera Jourova said on Twitter after the announcement by the European Commission.

Malta, with a population of 420,000, has sought to attract foreign capital with schemes such as a cash-for-passport programme, even though the EU has highlighted the risks of this potentially attracting the proceeds of criminal activities.

Under the scheme, people can obtain a Maltese passport by investing in the country.

Cyprus said last week it was suspending its citizenship-for- investment programme, ditching a scheme the government had acknowledged was open to abuse.

European Union flags flutter outside the European Commission headquarters in Brussels, Belgium August 21, 2020. REUTERS/Yves Herman/File Photo

Thousands of rich non-Europeans benefited from the plan introduced by Cyprus in 2013 offering a passport and visa-free travel throughout the EU in return for a minimum 2 million euro investment.

The European Commission said the Cypriot and Maltese governments had two months to reply to letters of formal notice and it could escalate the legal cases if the two countries do not provide satisfactory answers or make amends.

Under the EU's infringement procedure, the European Commission can refer cases to the bloc's Court of Justice and ultimately it can ask the court to impose penalties.

(Reporting by John Chalmers; editing by Francesco Guarascio)

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