Golden visa: a money laundering tool?

The prerequisites to gain a country’s nationality or a residence permit are not the same everywhere. Within Europe, examples range from Austria to Ireland. The first, one of the most restrictive in terms of granting nationality, where even being born there is no guarantee, unless one of the progenitors is Austrian. To gain nationality of the second country, however, simply having lived in the country for five years or if one of your progenitors is Irish (even if you were born elsewhere) is enough.

With money, however, these prerequisites are waived. Since the beginning of the second decade of 2000, most European countries have established a new way of acquiring nationality: via high-level investment such as buying luxury property, investing in a national development fund, government bonds or buying shares in a national company. This phenomenon is known as a Golden Visa programme.

goldenvisaCurrently, in Europe there are 4 countries that permit the acquisition of a passport with golden visas: Austria, Bulgaria, Cyprus and Malta, and 13 where a residence permit can be acquired with the same method: Bulgaria, Cyprus, France, Greece, Latvia, Ireland, Luxemburg, Malta, the Netherlands, Spain, the United Kingdom and, until last July, Hungary. The volume of investment required is determined by each country and ranges from 250,000 Euros in Greece to the 10 million Euros required in some cases in Austria. In Spain, the amount required is a minimum of 500,000 Euros in the case of purchasing property and 2 million if government bonds are acquired.

On 10 October 2018, Transparency International published the study European Getaway: Inside the Murky World of Golden Visas, where the European Union warns of the risks in terms of corruption due to Golden Visas and how they can become a threat to the Union’s integrity, as not all countries thoroughly monitor the source of the money involved. The study reveals that foreign investors, especially from Russia, China and Ukraine, are using Golden Visas as a tool to launder money in Europe.

Regarding European host countries, the ones granting most visas are Spain, Hungary, Latvia, Portugal and the United Kingdom, with over 10,000 applications accepted by each. These countries, however, have not published the names of new residents. The only countries that make them public, of all the 13 that offer a visa or passport, are Malta and Austria.

The publication reveals that there a range of factors that question the suitability of using this method as a way to attract foreign investment in exchange for a visa or passport:

  • First of all, the fact that one particular state is benefiting economically from a European asset, not a national one, as is agreed by what are known as the four freedoms: free circulation of goods, services, people and capital within the European Union countries.
  • In 2017, The Guardian revealed cases of corruption scandals involving Russian multimillionaires who had acquired a Cypriot passport and, therefore, European citizenship thanks to the Golden Visa programme.
  • Europe acts as an escape valve if those possessing a visa have legal problems in their country of origin.

Transparency International denounces the lack of operational integrity on the part of governments when following processes prior to granting visas and the lack of a common regulation in all Union countries, as the product on offer is common and has an impact on all countries.

Therefore, the study concludes with a series of recommendations for the Union to take action and for countries that offer visas and passports using this method. Among others, it recommends establishing common processes and strengthening mechanisms to determine the origin of the money invested, and fight against fraud and the laundering of capital, and how to adopt infringement procedures against state members that offer Golden Visas without respecting the common principles and objectives of the Union.

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