Over the past years, the golden visa has seen a surge in participation in its programmes. But along with its rising popularity, corruption and AML risks have also seeped into its core. Many argue that citizenship is a public good, not a commodity for the open market. In recent years, the EU and national governments have stepped forward to try to curb the surge in their misuse. Is the golden visa truly gold?

The term "Golden Visa" is not an official term for investment visas. It is just an attractive expression meant to make it sound more appealing to rich foreigners. Essentially, the term means that if you can present some "gold" (money), you can get to the front of the immigration process and get a visa faster than usual.

This type of investment-based migration dates back to 1984 when the first programme appeared in the Caribbean region (Saint Kitts and Nevis) and soon thereafter in North America (Canada in 1986, the United States in 1990). St. Kitts and Nevis first started the golden visa programme because it was cash-strapped from British colonization. After they became independent, they needed a way to sustain themselves financially. With time, other wealthier countries like the UK, Australia, the US, and Canada also saw the benefits of having a golden visa programme.
Golden Visa countries

However, this phenomenon is far newer in the EU, where most programmes were established, expanded, or renewed following the 2007-2009 financial crisis. There are currently plenty of countries worldwide that have golden visa- and “citizenship by investment” programmes.

Countries that provide Golden Visas Programmes2018 Transparency International REPORT

A golden visa is a citizenship by investment or residency by investment programme which allows wealthy individuals to get a residence permit or even citizenship in another country simply by purchasing property there, making a relatively large investment, or a donation without a loan.

Different countries have different investment options, which range from USD 250,000 to millions. Also, each country has different requirements for obtaining a golden visa. Some visa programmes are broader and have more options than others depending on the country.

If a person makes the required investment and apply for a golden visa, them and their immediate family members will become legal residents or citizens of that country. They can live there, go to school, get access to healthcare, etc. The visa can be renewed indefinitely if they maintain the investment. Additionally, in most cases there is little to no requirement to be present in the country they applied for. However, to get permanent residence or citizenship by investment, most nations will require actual residency of about five to ten years, depending on the country.

Golden visa family members
Individuals may seek a golden visa for their families. It allows their children to live and study in a foreign country. Easy world travel is also another reason why one would want to obtain a golden visa. For example, some wealthy individuals from politically unstable countries look upon golden visas as an insurance policy against such instability. They can do it to give their children a better education or more career opportunities not possible in their home country.

If dictators or authoritarian governments were to seize assets or confine individuals forcefully, then fleeing to the visa issuing country can be an important alternative. It can also just be an easy ticket to either emigrate to a new country or to be able to visit the country easily for a long term stay. The individual becomes a new ‘clean person’ without links to former businesses or criminal activity.

Lastly, a golden visa for an EU country is particularly desirable as it allows the holder (and their family members) to freely move throughout the entire Schengen Zone. If the golden visa eventually leads to EU citizenship, then the resulting passport will offer visa-free travel to over a hundred countries in the world, depending on the issuing State.
Golden Visa free movement Schengen

According to Transparency International (2018): Spain, Hungary, Latvia, Portugal and the United Kingdom (UK) have given out the highest numbers of golden visas to investors and their families – above 10,000 each. Next in line are Greece, Cyprus and Malta.

Most passports or visas through golden visa schemes are granted to Chinese and Russian people. In the report of Transparency International and Global Witness (2018), it is stated that: “According to an international advisor for citizenship programmes, Chinese nationals account for 70 per cent of the world’s golden visa market.”

Conditions in Europe to Gain Golden Visa

Golden visa programmes include direct contributions to governments, which is one of the investment options in some countries. The funds are kept in national development funds, which typically aim to promote education, quality healthcare, and the country’s overall development.

Unfortunately, there is very limited information on how the funds are used and on how governments decide on the distribution and the investment of those funds. The amount of revenues earned, their use and the amounts saved, spent, or invested should be subjected to financial audits, and all this information should be regularly available to the public. Otherwise, these schemes are at risk of offering several opportunities for corruption.
Golden Visas and corruption

Among others risks, abuse of power and bribery can weaken the state’s influence, but it can also lead to further corruption of the government and its national authorities, therefore jeopardising the state’s social contract and prolonging or shifting to a political stalemate.
There is obviously room for improvement notwithstanding the fact that countries in need for better economic prospects through private sector expansion might ask nothing but to be dazzled with gold despite subsequent national or regional risks.

Countries should adopt a clear and transparent accountability framework for the management of resources they earn through golden visa programmes. According to the latest Transparency International report, out of 17 schemes, seven have not disclosed how much investment they have raised. Except for Malta and Austria, none of the countries publishes lists of new citizens or residents.

Golden visa KYC
Secondly, public officials may be willing to accept applicants with controversial backgrounds simply for profit reasons. Some countries, such as Cyprus and Portugal, do not seem to inspect an applicant’s source of funds or wealth when analysing applications. The possibility that applicants who have criminal records or are subject to criminal investigation and may still be considered due to “special circumstances” should not be acceptable in order to preserve an equal rights ethos.

In September of 2022, the EU Commission has referred Malta to the EU Court of Justice for its continued refusal to end its golden visa scheme. Time will tell if this will have any effect.

There is a worrying lack of transparency over the Commission’s correspondences with Malta and Cyprus, as well as on the action being taken on this issue more generally.~ Global Witness, 2018

Golden visa schemes can become an attractive alternative for criminals and corrupt individuals. With a golden visa, travelling under the radar of sanction regimes becomes much easier. And if the situation back home becomes critical, a golden visa can serve as a get-out-of-jail-free card for that person and their family members, allowing them to get out of town, and evade law enforcement or prosecution efforts.

If there is to be a risk profile of applicants, then it should demand the strictest of due diligence and the strongest measures to protect the integrity of the EU. However, recent scandals show that the applicants’ profiles are not as carefully examined as they should be.

Golden Visa criminal risk
Specifically for Europe, the minority of Member States are profiting from jointly shared EU assets because of internal free movement and external visa-waiver agreements. In conclusion, they are enjoying the spoils while exposing their neighbours to risk because, if given citizenship, criminals can make use of the freedom of movement, rights, and protection offered through their new European status.

Citizenship is an active duty and a critical building block in the development of a democratic community that should not be sold to the passive, footloose, and mobile investors. They lack harmonised rules and practices at EU level.
Also, this is only an option for well-off people. Individuals who do not have the resources will have to wait their turn and might not even receive residency or citizenship. This all is the immorality of the story.

For all these risks and “problems”, there are responses. Here are a couple of positions that the EU and the national governments can take to minimize the previous explained issues.

In April 2018, the EU issued the 5th Anti-Money Laundering (AML) Directive, which established stronger European anti-money laundering standards. Annex III of the Directive introduces a provision requiring banks and other obliged professionals, such as real estate agents, lawyers and accountants to consider customers applying for golden visas as a potential higher-risk factor during the due diligence process.
Golden Visas EU CDD

Even though this Directive recognises the anti-money laundering risks brought by golden visas, it falls short of fully covering the problem. It can result in being counterproductive. In this directive, the EU essentially shifts the responsibility of implementing due diligence to banks and intermediaries, which is not stringent enough or can easily be overlooked.

In the immediate term, the European Commission must consider the money laundering and corruption risks of golden visas and formulate the right guidelines and rules for the Member States. In conclusion, they should:

  • 1

    Set EU-wide standards of enhanced due diligence, operational integrity, and transparency to prevent the abuse of these schemes by the corrupt and the criminal.

  • 2

    Establish a mechanism that regularly reassesses these risks and issues corresponding mitigation measures.

  • 3

    Establish mechanisms for coordinating information sharing between the Member States concerning rejected applicants.

In general, national governments should also do their best to take preventive measures. The least they should do is:

  • 1

    Make sure that all golden visa applicants and their family members are subject to enhanced due diligence which should include checks to find political connections and/or exposure, any corrupt business practices, source of wealth and work experience, links to organised crime, suspected involvement in money laundering and other illegal activities, relationships with sanctioned entities and social, and environmental responsibility.

  • 2

    Publish all statistics on the success rate of applications and their background, as well as all statistics regarding the investments.

  • 3

    Share information on individuals whose golden visa applications have been denied due to security issues or risk exposure with EU authorities. National governments should ensure that any suspicions about an applicant arising from enhanced due diligence processes are shared in a timely manner with and among relevant national, regional and international investigative bodies.

  • 4

    There should be whistleblowing mechanisms for staff and citizens to report concerns and wrongdoing.

This is just a beginning as there are more actions to be taken. Golden visas should only be given to individuals with exceptional track records. Some Member States may benefit from the additional revenue that the regime grants them, while others will have to deploy enhanced due diligence controls to track illicit money flows and corruption. It is therefore essential to harmonize the sale of residence and citizenship across the EU.

EU citizenship by investment statistics

There is still no union law, only at national level (but are not considerate of other Member States)., Golden visa programmes around the world have seen a few changes in recent years:

  • 1

    As of 2020, Cyprus cancelled its Golden Visa programme.

  • 2

    Moldova’s golden visa was launched in 2018 and provided one of the cheapest European Golden Visas. Yet, in 2020 the government suspended the programme after most of the parliament voted against it.

  • 3

    Montenegro has made the final decision to stop its golden visa programme. While the programme offered citizenship by investment with a total amount of €350,000, the programme will close in December of 2022. This decision comes mainly from Montenegro’s aspirations to join the EU. Additionally, their programme received a limited number of applications encouraging the termination.

  • 4

    In 2022, Bulgaria ended its golden visa passport scheme while Portugal ended its programme in February 2023.

In conclusion, golden visas are handed out to wealthy individuals and their families after they invested a large amount in the issuing country. They gain either residency or citizenship depending on the country they apply for. It can be said that this is unfair to unwealthy people. Also, corruption can be easily executed. The issue within Europe is that people receive residency and are free to move within the whole zone, which is unrightful to the other Member States. It is up to both the European Union and the national governments to act and fight against AML risks that come with the golden visa.

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