The European Commission has stepped up legal action against Cyprus and Malta over their cash-for-passports schemes in a move that may eventually see them end up in court and face fines.
The EU executive launched the first step of the legal process in October last year when it sent letters of formal notice to the two countries, giving them two months to respond.
On Wednesday, the Commission sent a reasoned opinion to Cyprus for failing to address its concerns.
Nicosia has two months to inform the Commission of measures taken to comply with EU laws or face legal action.
“While Cyprus has repealed its scheme and stopped receiving new applications on 1 November 2020, it continues processing pending applications,” it said in a statement.
The move came two days after an official inquiry found the Cypriot government broke its own law countless times in granting citizenship to over 6,700 people from 2007 to 2020.
In response, the Interior Ministry said it was assessing the reasoned opinion and would respond within the specified deadline.
“Therefore, at this stage, actions that may affect the ongoing process should be avoided,” the ministry said.
It said persons were already facing prosecution for alleged transgressions connected to the passport programme.
“The first criminal case concerning five individuals and four legal entities has been registered before the Court, with a total of 37 charges, while at the same time other cases are under investigation by the police.”
The Commission considers that by establishing and operating investor citizenship schemes that offer citizenship in exchange for pre-determined payments and investments, the two Member States failed to fulfil their obligations.
Brussels issued an additional letter of formal notice to Malta, expanding on its concerns last year and giving it two months to respond.
The next step would be a reasoned opinion from the EU executive.
“While the previous investor citizenship scheme is no longer in force, Malta established a new scheme at the end of 2020,” it said.
Malta started selling passports to wealthy foreigners in 2014, with strong demand mostly from rich Russians, Chinese and others in the Arab gulf.
An EU passport grants visa-free travel, working and residency rights throughout the 27-nation European Union.
In response to the Commission’s move, the Maltese government said it “firmly” reiterated that citizenship is a matter for member states to decide and should remain so.
It added that it wanted a “constructive dialogue” with Brussels and would answer its objections more fully in due course.
Valletta’s ‘citizenship by investment’ scheme has raked in $1.5 bln since it was launched in 2014, while Cyprus ‘golden passports’ generated over €7 bln. (source agencies)