Sale of citizenship ‘ruining Malta’s reputation’ – PN

Yet another example of the inherent corruption of citizenship-by-investment programs:

A news report saying that a person who bought Maltese citizenship is facing serious accusations of fraud in the United States and Israel in yet another blow to Malta’s reputation, the Nationalist Party said in a statement.

This person was among the first to buy a Maltese passport, another for his wife and for their children, the PN said.

This is the fifth person to buy Maltese citizenship who is facing criminal accusations of fraud, money laundering and tax evasion. This brings to nothing the government’s boasting of a four-tier due diligence that is adopted before foreigners are allowed to buy Maltese citizenship.

The PN said that it has always insisted that such a scheme could give a bad image to Malta. Only a few weeks ago a firm involved in the sale of passports was caught boasting of its strong connections with the government.

In the light of this, the PN is once again calling upon the government to suspend the scheme.

Source: Sale of citizenship ‘ruining Malta’s reputation’ – PN

Citizenship [by investment] scheme risks are flagged in EU terror report

Not surprising:

A report about EU-wide money-laundering and terrorism financing risks has again zeroed in on citizenship schemes like the one operated in Malta.

The controversial scheme, introduced by the Labour government after sweeping to power in 2013, allows passport buyers access to an EU passport against payments and investments totalling over €1 million.

Misuse of such schemes, which the European Commission notes are deliberately marketed as a means of acquiring EU citizenship, together with all the rights and privileges associated with it, create a range of risks for the EU.

The Commission’s report was highlighted on the Financial Intelligence Analysis Unit’s website this month.

Among the risks identified by the Commission are the possible infiltration of non-EU organised crime groups, as well as money-laundering, corruption and tax evasion possibilities.

Just last week, Identity Malta, the government agency that runs the scheme, confirmed it had initiated the process to withdraw the Maltese citizenship of Mustafa Abdel-Wadood, who has pleaded guilty to fraud and money-laundering in the US.

Another passport recipient, Chinese national Liu Zhongtian, was recently indicted in the United States amid allegations he avoided paying $1.8 billion in aluminium tariffs.

Concern about lack of transparency and governance of the schemes

The Commission says risks associated with citizenship schemes are exacerbated by cross-border rights associated with EU citizenship or residence in a member state. There is also a concern about lack of transparency and governance of the schemes.

Malta’s scheme has been criticised by the Opposition and international bodies for failing to clearly identify who has bought their passport.

Another problem with EU citizenship schemes identified by the Commission is that the procedure of screening applicants is often outsourced to private companies, where there is a permanent risk of conflict of interest and corruption.

It also raises fears that competition between European Union countries could result in a race to the bottom over standards of due diligence and transparency.

In a direct reference to Malta’s scheme, the Commission says Maltese citizenship is popular with wealthy Russians. Saudi Arabians have also invested in the scheme.

It says one Maltese passport buyer, Waleed al-Ibrahim, chairman of the Middle East Broadcasting Centre, was arrested in November 2017 as part of a corruption purge.

The government insists the scheme complies with the highest standards of due diligence.

Source: Citizenship scheme risks are flagged in EU terror report

Two Saudi families buy 62 Maltese passports

Perhaps one of the more glaring examples of the corruption of citizenship by investment programs:

Sixty-two members of two of the richest families in Saudi Arabia became ‘Maltese and EU citizens’ last year after paying millions of euros to buy Malta passports, Times of Malta learnt.

According to the 2017 list of new Maltese citizens, published in The Government Gazette a few days ago, the Al-Muhaidibs and Al-Agils became fully-fledged Maltese citizens last year, even though most of them are minors and might have never set foot on Maltese soil.

The Al-Muhaidibs and the Al-Agils are not only two of the wealthiest business clans in the Saudi kingdom, they are also mentioned by Forbes as among the wealthiest families on the planet.

The Al-Muhaidib Group was established in 1946 and mainly deals in building material and foodstuffs. Group chairman, Sulaiman Al-Muhaidib, who, according to Forbes, has a personal wealth exceeding €3 billion, acquired a Maltese passport last year together with 34 other family members, including his brothers, spouses and their families.

The Government Gazette list, which gives details on a  first name alphabetical order rather than the normal surname module, making it more difficult to distinguish passport buyers from purely new Maltese nationals, indicated that the Al-Agils, who control the Jarir Group business empire, worth over €1.5 billion, procured 27 Maltese passports.

The Jarir Group, which is listed on the Saudi stock exchange and trades in many areas, is controlled by brothers Mohammed, Abdulkarim, Abdulsalam, Abdullah and Naser, all appearing as new Maltese citizens.

Most of them are minors and might have never set foot on Maltese soil

Very little information is given about Malta’s controversial cash for passports scheme, launched in 2014, despite the fact that those who pay large sums of money and buy/rent property on the island are entitled to a Maltese passport, citizenship and the right to vote.

The government has always resisted calls to publish the list of those acquiring Maltese passports through payment and, instead, publishes the names of the new ‘Maltese citizens’ together with hundreds of other names who acquire Maltese citizenship every year through a long legal process, normally through naturalisation.

Read: Henley boasts of cash-for-passports scheme in Malta

Various government spokesmen, including ministers and officials of Identity Malta, have repeatedly shot down calls to make the names of passport buyers’ public, arguing that would jeopardise the scheme’s popularity.

Identity Malta sources told Times of Malta that those buying Maltese passports would not usually be very interested in making such a fact known, especially to their own governments.

A major share of Malta’s passport buyers’ hail from Saudi Arabia as well as other gulf states and far eastern countries. People living in former Soviet republics have also been attracted by the so-called Individual Investor Programme.

More than acquiring Maltese passports, those who fork out €650,000 for every passport and another €25,000 for each dependent would be seeking freedom of movement within the EU since they would also attain EU citizenship as a result.

Although the EU does not look at these schemes positively, it has, so far, tolerated them. This is also due to its limited powers in this area because citizenship rights fall under the direct jurisdiction of member states.

Source: Two Saudi families buy 62 Maltese passports

Malta: Henley and Partners’ profits rise by 500%, selling passports

A lucrative business:

The citizenship planning firm, Henley and Partners, has seen its share of distributed funds from the Individual Investor Programme (IIP) increase by over 500%, calculations by Newsbook.com.mt finds.

The firm is a leader in the process more commonly known in Malta, as the selling of Maltese passports.

Comparing the reporting by the Office of the Regulator for the IIP for the Third and the Fifth Reports (2016 – 2018), the firm has managed to make a significant sum of money through the IIP. The reporting period ranges between the 1st July and 30th June.

In the Third report which includes the profits from the start of the IIP to the 2016/17 reporting period, Henley and Partners managed to make €5.8m from their services.

The publication of the Fifth report last month, now shows that that this number has grown to €28.8m, 500% since the IIP process began

As with previous years, the sums of money that the firm receives come via a Suspense account which is set up to receive the financial contributions, property purchases, rents and investments generated from individuals seeking citizenship.  These elements are written into the Laws of Malta.

Once the individual(s) have made the Oath of Allegiance, these funds are then distributed under IIP guidelines. Henley and Partners is entitled to receive 4% of the contributions as well as 4% of the investments made under the Investment Requirement.

MEPs speak to Henley and Partners

The firm is by no means the only entity in Malta carrying out this process of ‘citizenship planning’ and it is clear from the reporting periods that Identity Malta generates more from the IIP. H&P are however a prime mover and shaker in the investment visa field, a field said to still be in need of proper regulation.

During their investigations into the murder of Daphne Caruana Galizia, and wider concerns about Malta, an EU delegation of MEPs from the Committee on Civil Liberties, Justice and Home Affairs, spoke to the firm trying to understand more about how the process works, and the firm’s role in it.

Malta and Cyprus are the only two countries which operate the ‘Golden citizenship programme’ within the EU, and according to their discussions with a representative of Henley and Partners, they found that they facilitate only 40% of the total number of applications for Malta.

With EU sanctions imposed on Russia and Russians being one of Malta’s citizenship clientele, the delegation raised concerns about a number of those blacklisted under EU sanctions who had managed to receive citizenship through their programme. H&P insisted that their due diligence processes were ‘very reliable’. The continued saying that the process is, ‘extremely serious and rather lengthy’ and that, ‘it is not easy to get citizenship rapidly’.

The representative added that they cooperate with the government and other organisations in cross checking the identities and backgrounds of those making applications.

The delegation report states that rejection rates for Russians have been going up and this is consistent with the 25% overall rejection rate that currently stands in Malta.

Applications are down but demand is steady

The latest regulator report shows that numbers of applications have dropped in the yearly reporting period, standing at 330, 47 less than the last year.

However, numbers from Europe remain high at 141 applications, 42.7%. Asia has also grown to 107 this year, 32.4%. This is 11%  greater than last and four times greater than 2015 figures (8.6%).

The Middle East has seen a 5.6% drop its numbers with only 26 applications made. Individuals from African states on the other hand, submitted 30 applications this year (9.1%), almost 4% more than 2016/17 reporting.

Overall, the number of approved applications was 223, making the total to June 2018, 961. This offsets the number of rejected or withdrawn applications which currently sits at 75.

Turning serious money into solid investment

Investment clients ‘are obliged to invest in a residential immovable property in Malta, either by acquiring and holding one having a minimum value of €350,000 or by taking one on lease for a minimum annual rent of €16,000.’ This is stipulated under the IIP Regulations.

Over this year’s reporting period, the total amount of property purchased as part of the IIP’s investment regulations sits at €29,600,500. This covers the value of 25 properties averaging €1,184,020 in value.

Sliema and St Julians are the most favourable places for this property, accounting for 72% of those purchased.

According to the 2016/17 report, there were 80 properties purchased, more than this year. The favourable locations of those properties remains consistent with this year.

Over 200 (231) other properties were being leased for a contractual duration of 5 years. This amounts to a total of €23,062,687.64, averaging €95,695.80 per contract and €19,139.16 per lease.

These leased properties are found across 26 different areas in Malta with Sliema and St Julians emerging as the most favourable again, 35% and 21% respectively.

Last year’s figures show that the number of leased properties was over double that of this reporting period. 483 properties were leased by investment clients. Their locations are also as varied as this year’s report.

They didn’t speak to me, they didn’t look at the reports

This year’s report opens with some criticism from the regulator, Mr Carmel DeGabriele. In his foreword to the report, he talks about his disappointment that members of the EU delegation that visited Malta, did not consult with him or look at the previous reporting or frameworks that the IIP use to vet potential citizenship candidates and use the funds.

He says that, ‘none of the fact-finding missions which came over to Malta from both the European Commission and the European Parliament as well as other institutions that have decided to criticize the running of this Programme have even bothered to request a meeting with the undersigned or any of the members of my Office or seem to have at least carefully studied any of this Office’s past Annual Reports before expressing in one way or another their deep concerns over this Programme.’

He also readdressed the question that the contributions that are paid in through the regulations go towards the country’s improvement.

‘It has already been spelt out that the income which the Government is and will be deriving from this Programme will in the coming months and years play an extremely important role in the country’s infrastructural boom and social development.’

Source: Henley and Partners’ profits rise by 500%, selling passports

The EU Is Demanding A Critical Change To Malta’s Sale Of Citizenship Scheme

Overdue (and likely not enough):

The European Commission demanded Malta revamp its controversial sale-of-citizenship scheme to ensure new Maltese citizens live on the island for at least a year.

“Becoming a Maltese citizen means becoming an EU citizen and gaining the benefits of free movement,” EU Justice Commissioner Vĕra Jourová said during a visit to Malta this afternoon. “The European Commission must ensure that Malta only gives citizenship to people with a real link to the country and who reside in it for at least a year.”

Jourová’s warning will come as a blow to the Maltese government, which often rebuts criticism at the Individual Investor Programme (IIP) by insisting that the European Commission has no problem with it.

While acknowledging that member states have sovereignty over citizenship schemes, Jourová pledged to continue raising concerns about potential threats posed by the IIP.

“We must not enable suspicious people to acquire European citizenship through an easy way and use it to launder money or to pose some sort of security threats to the continent,” she said. “We have a legitimate right to require some basic parameters for citizenship scheme.”

She said the European Commission is currently analysing all EU citizenship schemes, including Malta’s IIP, ahead of a detailed report that will be published by the end of the year.

“If it turns out that this assessment isn’t favourable to the Maltese IIP, then I believe we will be able to work hand in hand with the Maltese authorities to improve the system.”

Jourová’s assessment came after she met key players in the industry today, including the IIP’s chief executive officer Jonathan Cardona.

The IIP requires applicants to pay €650,000 to the government as well as to invest in government bonds and to either buy a property worth at least €350,000 or to rent a property out for at least €16,000 over five years. However, it doesn’t require applicants to actually live on the island – a fact that was probed by the BBC alongside Daphne Caruana Galizia a few months before her assassination.

Source: The EU Is Demanding A Critical Change To Malta’s Sale Of Citizenship Scheme

ICYMI: Here Is A List Of Everyone Who Got A Maltese Passport Last Year – Lovin Malta

Great example of false transparency – providing all information in a manner not susceptible to analysis:

The government has finally released a list of every single person who bought a Maltese passport in 2016.

It includes their names and surnames – more than enough to do some background checking to see whether there is anything we should know about them (see below for more details).

There’s only one problem – the names are buried in a list of the 2,182 people who became naturalised Maltese citizens in 2016.

Instead of printing them in separate lists, both citizenship buyers as well as citizenship earners have been combined in one large list.

There are no markers by their names, or any other way to figure out that those specific people had bought their Maltese citizenship through the Individual Investment Programme.

The Malta Government Gazette published the list, and when the Times of Malta asked for a breakdown of the passport buyers names, they were rejected.

As you’d expect, the list contains a lot of foreign surnames, including Russian, Asian, and Middle Eastern surnames.

The government, for its part, has maintained that these new citizens are now Maltese citizens equal to any other, and publishing their names in a separate list or marking them out could be discriminatory.

It has also said that publishing their names could jeopardise the success of the scheme since most of the buyers preferred to keep their personal information discrete.

While exact numbers on how many people have actually bought their Maltese passport have never been released, there seems to be 1,101 main applicants according to the government-appointed regulator’s most recent report, released in June.

This comes after a delegation of MEPs that visited Malta last month on a rule of law fact-finding mission asked the Prime Minister for full list of Maltese passport-buyers, only to be rejected on the grounds that giving them that list would be illegal

It’s also worth noting that by December 2017, there was €360 million in the National Development and Social Fund, where a majority of the IIP’s profits go.

A Maltese passport can be bought for about €650,000 alongside a five-year investment into Maltese property or bond.

Want to be an investigative journalist for a day?
The government has printed the 2,182 names of naturalised citizens for 2016. If you’ve got some spare time and want to be a part of our investigation, here’s how you can help

  • Go to the latest issue of the Government Gazzette

  • Go to page 14,018

  • Select some names and Google them

  • Email us at hello@lovinmalta.com if you think you might have found someone worth looking into

  • Google some of these names, and if you find something you think is interesting, contact us at hello@lovinmalta.com.

via Here Is A List Of Everyone Who Got A Maltese Passport Last Year – Lovin Malta

Malta’s “due diligence” of rich passport buyers gets glowing review

Different meaning of “due diligence”:

Malta’s due diligence of people applying to buy citizenship has been held up as “a textbook example” of effectiveness and reliability by Thomson Reuters.
Peter Vincent, general counsel at the Canadian company that provides intelligence services, said Malta’s Individual Investor Programme provided a high standard of due diligence.

“Malta has a reputation for having a very solid programme for citizenship and residency that has very secure due diligence processes in place and transparency. It’s by no means perfect but there is no completely secure system in the world but if you are looking for a model, not just for the EU but for the entire world, I would look to a country like Malta,” Vincent said in an interview with Investment Migration Insider, an industry journal.

Thomson Reuters is one of the companies used by Identity Malta to help it in the screening of prospective clients.

Vincent was speaking on the price war in the Caribbean over citizenship programmes, which was affecting due diligence standards in the region.

“Malta is a textbook example of how to conduct effective and reliable due diligence,” he said, adding that Identity Malta should look beyond its remit and mentor other countries still trying to develop their programmes.

The IIP was introduced amid much controversy in 2014 with the aim of attracting rich foreign nationals interested in buying Maltese citizenship. The scheme has enabled the country to create a multi-million euro fund administered separately from government accounts.

The programme last year raised some €165 million and is capped at 1,800 applications, a number likely to be reached some time next year.

The government has been criticised by the European Parliament because the names of those who obtain citizenship through the IIP are not published separately. Instead, the names are included without any specific identifier with those of others who obtain citizenship through naturalisation.

At a recent citizenship forum organised by Henley and Partners, the company entrusted to manage and market Malta’s scheme, Prime Minister Joseph Muscat said Malta will be extending its citizenship by investment programme.

He told his audience in Hong Kong the second IIP programme would be “even more exclusive” than the current version, without elaborating further.

via Malta’s due diligence of rich passport buyers gets glowing review

These are the countries you can ‘buy’ citizenship to – Business Insider

Another good overview of the various schemes, and the relative advantages for those shopping for citizenship:

Most countries offer citizenship (passports) the hard way. But 7 sell them outright, and 3 have “powerful” passports. “Citizenship Planning” is a thing.

For people who need a second citizenship and passport to dodge the long arm of their government, there is something called “citizenship planning,” similar to “financial planning.” But when it comes to just outright buying a citizenship and passport without having to languish for years as mere non-citizen resident, the Huddled Masses need not apply. And not any passport will do. In fact, there are only three for sale that are really good.

Which are the best passports to get?

There are quality standards for everything, especially if it’s costly. The most powerful passports are those that allow visa-free travel to the most countries.

There are other considerations, for example those that drive US citizens nuts when they live overseas, due to the US government’s onerous reporting requirements on them and on banks that do business with them, and due to US taxation of their worldwide income no matter where they live. Few other governments treat their citizens that way.

In terms of visa-free travel, here are the 25 countries with the most powerful passports, according to a new ranking by Henley & Partners, which is into “citizenship planning.” But among them is only – Austria – one whose citizenship can be bought (more on that in a moment):

  1. Germany: visa-free travel to 176 countries.
  2. Sweden: 175 countries
  3. Denmark, Finland, Italy, Spain, and the US: 174 countries.
  4. Austria, Belgium, France, Luxembourg, Netherlands, Norway, Singapore, UK: 173 countries
  5. Republic of Ireland, Japan, New Zealand: 172 countries
  6. Croatia, Greece, Portugal, Switzerland: 171 countries
  7. Australia, South Korea: 170 countries
  8. Iceland: 169 countries.

And how do you get one of those passports?

In most countries, the hard way: Legally immigrate and obtain residency, and then fulfill the residency requirements to get citizenship and that second passport, which takes years. Most countries, including the US, have special programs for “investors” to obtain residency, such as a green card, essentially on the spot, but even then it takes years to obtain citizenship and a passport. If it’s possible at all, such as in Germany.

Then there’s the direct way: Buy a citizenship and the passport that comes along with it. These citizenship-by-investment programs are not for folks on a tight budget. According to Henley & Partners, only seven countries offer this convenient route, only three have powerful passports, and only one is in the top of the heap above.

Passports from EU countries are the best. If you’re from Russia or China or Iraq and become a citizen of one of the 28 EU countries, you’ll get a country-specific EU passport that allows you to live and do business anywhere in the EU. There are all sorts of offshore benefits. And travel around the world is a breeze.

But citizenship in most EU countries is not for sale. You can buy only residency, similar to programs in the US. But there are three exceptions:

Austria

Citizenship is almost impossible to get for normal foreigners already legally in Austria. But the super-rich and famous have a way. The government, through paragraph 10, section 6 of the Citizenship Act, can confer citizenship “because of the services already provided by the foreigner and the extraordinary achievements still to be expected of him in the special interest of the Republic.” This usually involves a big direct investments of unspecified magnitude plus some other “extraordinary” contribution, such as being famous or creating jobs. Few succeed. In some years, none succeed.

They’re playing hard to get. But the rewards are huge for the few that succeed, including an impeccable EU passport with visa-free travel to 173 countries.

Cyprus

In 2012, as the EU-part of the divided island was veering toward bankruptcy, it offered citizenship through a “fast-track” scheme to dodge the normal residency requirements. But the price tag was €10 million in direct investment. Too expensive for the average oligarch.

In 2013, Cyprus became desperate. Its offshore financial industry, the main breadwinner of the economy, had collapsed in a cesspool of corruption. The banks had taken much of the foreign money – particularly Russian money – down with them. Cyprus needed some moolah. It slashed the price of citizenship to €3 million of direct investment. Russians who’d lost at least €3 million in the collapse would also be eligible for citizenship.

Since then, the price was further slashed, to as low as €2 million. And it’s fast: about three months for citizenship and an EU passport, with visa-free travel to 159 countries. And that €3-million investment can be sold after three years. An adequate house would likely do.

Malta

The tiny EU member state with 417,000 residents spread over three islands is convenient for foreigners, with English being one of the two official languages. In 2013, during the still rough waters of the euro debt crisis, Parliament passed legislation that put Maltese citizenship up for sale at €650,000. A spouse costs another €25,000; unmarried children between 18 and 25 and dependent parents cost €50,000 each. There are no residency or investment requirements. The money goes into government funds.

This citizenship is a product to be marketed. If it sells 100 per year at €650,000 a pop, it would generate annual revenues of €65 million – or 1.75% of total 2016 revenues (€3.7 billion). Given the limits on budget deficits under EU Treaties, everything counts.

This Maltese product includes an EU passport with visa-free travel to 166 countries. Folks can stop by, jump through some bureaucratic hoops, pay, get their citizenship and passport, and settle in Germany or wherever. At the time, Simon Busuttil, leader of the opposition Nationalist Party, warned that Malta could end up being compared to shady tax havens in the Caribbean. And that’s our last stop.

Source: These are the countries you can ‘buy’ citizenship to – Business Insider

Malta PM says decisions on citizenship by investment schemes should not be taken by politicians

This is the flagship model used by advocates of investor and citizenship immigration programs in Canada. Does not change the fundamental question of the morality and ethics of buying citizenship, and that this is largely driven by the business interests of consultants, rather than broader ones:

Prime Minister Joseph Muscat underlined the benefits of the Citizenship by Investment programme for the Maltese economy when he addressed the Investment Migration Forum 2016 in Geneva this afternoon.

The forum is being hosted by the Investment Migration Council, a worldwide association for investor immigration and citizenship-by-investment, grouping the leading stakeholders in the field and giving the industry a voice.

Dr Muscat said the global industry linked to citizenship by investment would grow when criteria for such schemes were known and decisions were taken by technical people and not politicians.

He said that it was on this basis that Malta successfully launched its programme, which was now yielding great benefits for the economy.

He said that despite controversies, Malta’s scheme still remained the only one approved by the European Commission.

Source: PM says decisions on citizenship by investment schemes should not be taken by politicians – timesofmalta.com

Malta’s citizenship scheme ranks number one in Henley & Partners report – The Malta Independent

Best compilation of citizenship investment programs, by the company that promotes them:

Malta’s citizenship scheme has taken the number one spot in a report compiled by Henley & Partners.

Henley & Partners launched its Global Residence and Citizenship Programs 2016 report, which ranks the 19 most relevant residence-by-investment programs as well as the top eight citizenship-by-investment programs available throughout the world today.

“For the second year in a row, Malta’s Individual Investor Programme is the top ranking citizenship-by-investment program in the world, with a score of 73 out of 100. The Mediterranean island nation is followed by Cyprus (71), and Antigua and Barbuda (62) in 2nd and 3rd place respectively,” the report read.

“A Maltese citizen has the right of settlement in all 28 EU countries and enjoys visa-free travel to 168 countries worldwide including the EU, the US and Canada. For improved visa-free travel, permanent relocation, and financial security, Malta is the way to go”.

“The Malta Individual Investor Programme is a modern citizenship-by-investment program designed, implemented and globally promoted by Henley & Partners for the Government of Malta under a Public Services Concession. Moreover, it is considered the world’s most advanced and most exclusive citizenship-by-investment program, being capped at 1800 applicants. Compliance and due diligence standards are considered to be the world’s strictest, aiming to ensure that only the most respectable of applicants are admitted”

As for Residency programmes, out of the 19 programs reviewed, Portugal’s Golden Residence Permit Program has again emerged as the world’s best residence-by-investment program, with a score of 80 out of 100. It is followed by Belgium (78) and Austria (77) in 2nd and 3rd place respectively.

In order for a person to acquire Maltese citizenship, one would have to make a contribution to the development of Malta, make a purchase of stocks/bonds, and must undertake a property transaction. “The combined upfront financial requirement, including applicable government charges and citizenship application fees, is just under  €900,000, the Henley and Partners website says.

Source: Malta’s citizenship scheme ranks number one in Henley & Partners report – The Malta Independent