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Legal action begins against Cyprus and Malta over controversial citizenship scheme, Commission says ‘European values are not for sale.’

By Dan Byrne for AMLi

CYPRUS and Malta are now formally facing legal action by the European Commission for the wrongful “selling” of EU citizenship.

The Commission said Tuesday it had written to the governments of both Mediterranean island nations with formal notice of legal action regarding their ‘citizenship by investment schemes’ and their direct conflict with EU treaties.

Cyprus and Malta have arrangements allowing foreign nationals to access citizenship if they invest certain amounts in the respective country’s economy.

Citizenship of either country means citizenship of the EU as well – a fact that is frequently advertised on promotional material by the governments and third-party agencies.

The commission has claimed that obtaining citizenship in this way doesn’t comply with Article 4(3) of the Treaty on the European Union – in particular the principle of “sincere cooperation.”

In a statement, it re-affirmed the words of President Ursula Von der Leyen in her State of the Union address in September: “European values are not for sale.”

“When a Member State awards nationality, the person concerned automatically becomes an EU citizen and enjoys all rights linked to this status,” the statement read.

“The Commission considers that the granting of EU citizenship for pre-determined payments… without any genuine links with the Members States concerned, undermines the essence of EU citizenship.”

The announcement follows an already turbulent year for the programmes’ reputations across the continent.

It was announced earlier this month that seven people who obtained citizenship by investment in Cyprus were to have that status revoked for making false statements in their applications.

An extensive investigation released by Al Jazeera in August found that the Cypriot investment programme may have been used by over 60 individuals labelled as ‘high-risk’ for money laundering or other financial crime.

Cyprus has announced that it will call a halt to its programme entirely in light the revelations.

Meanwhile, Maltese Prime Minister Robert Abela praised the concept and the impact it has had on Malta’s finances.  

“We will be defending Malta,” he told the Times of Malta prior to unveiling the nation’s 2021 budget. “Had it not been for the contributions from that programme, which we are in the process of winding down, we would probably not have been in a position to present a budget of this scale.”

Citizenship by investment schemes are not unique to Cyprus and Malta, and the Commission has also written to Bulgaria to seek further details on theirs.

The Commission has long opposed these kinds of schemes in general, saying that they carry greater risk for money laundering, tax evasion and other forms of corruption.

Both governments now have two months to reply to the letter of formal notices. The Commission will deliberate on next steps if it doesn’t deem the responses satisfactory. 

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