IM Yearbook 2020/21

on investment migration, the Commission
already suggested that a genuine link
should be evidenced to claim a citizenship.
Yet, such a view would be at odds with
the fact that numerous member states
regularly grant citizenship to foreigners
in recognition of their exceptional
achievements or their contribution to the
state. Legal experts also point out that
this argument could have far-reaching
consequences, and it may also open
the door to further legal challenges to
national citizenship policies. In addition,
they say it is unclear how citizenshipby-investment
programmes potentially
affect the principle of sincere cooperation,
which the Commission mentions too.
The Commission has yet to explain its
legal arguments in detail; the investment
migration industry is ready to listen.
Transparency and Risk Management
There is little doubt that the industry
will have to step up and strengthen
transparency and risk management
further if it wants to win over critics in
EU circles. In 2019, both the European
Commission and the European
Parliament have released opinions on
money laundering and tax or justice
evasion, which made explicit references
to investment migration programmes
in some member states. It was certainly
a welcome development that the final
EU recommendations called for greater
transparency and better risk mitigation,
not an outright ban on investment
migration. However, in its report on
so-called “golden” visas, the European
Commission announced it will monitor
the steps taken by member states to
ensure transparency and mitigate risks
in investment migration programmes
very closely. Many in the industry believe
that the recent revelations surrounding
the Cypriot citizenship-by-investment
programme have prompted the European
Commission to open infringement
proceedings. The Council of Europe, a
non-EU institution, also urged member
states to find measures preventing
individuals from unlawfully abusing
investment migration programmes.
Rule of Law
Ursula von der Leyen’s reference to the
protection of European values needs
to be viewed in the context of the EU’s
growing ambitions in the field of the rule
of law. The legal basis for its “mandate”
is Article 2 of the Treaty on European
Union (TEU), which lists the founding
values of the Union. Traditionally, the
Commission merely monitored national
institutional setting, for instance to ensure
the effective separation of powers.
Recently, however, the Commission
has also been scrutinising domestic
governance and legal frameworks to
uphold transparency and risk mitigation
against fraud. It refers to those issues as
breaches of the common European values
that it ought to uphold throughout the
bloc. In September 2020, the Commission
published its first Annual Report
on the Rule of Law. The publication
provides a comprehensive review of
each member state, including on matters
of corruption, tax evasion and money
laundering. Yet, it does not include any
mention of investment migration.
Even though investment migration
programmes were not directly referenced
in the Rule of Law report, the industry
should remain vigilant. Industry experts
find it worrying that investment migration
continues to be looked at through the
lenses of its potential misuse. Many
argue that a proactive engagement with
the European institutions is paramount
to counter this political narrative.
Anti-Money Laundering and Taxation
In 2021, the investment migration
industry can also expect to hear more
from the Group of Member State
Experts on Investor Citizenship and
Residence Schemes. This group,
established in 2019 by the European
Commission, aims to identify areas
where the EU legislator could intervene.
The experts already determined that a
standard set of security checks and risk
management measures are essential
for efficiently governing investment
migration programmes across the EU.
The checks the experts referred
to are those the EU put forward in its
recent anti-money laundering (AML)
and combating the financing of terrorism
(CFT) regulations. The AML/CFT
rules establish stringent monitoring
mechanisms and due diligence procedures
on large financial transactions. These rules
thus apply to investment migration, and
the industry should continue to closely
monitor future update as they may affect
the governance of the programmes.
Taxation is another area that
is often brought in connection
with investment migration.
At the European Parliament,
since September 2020 a permanent
subcommittee on tax matters has started
to meet on a regular basis. Among
other issues, the newly established
subcommittee deals with tax evasion
and money laundering. It is too early
to argue whether their legislative
work will be harmful to investment
migration, but the industry should
closely follow how the subcommittee’s
2021 legislative agenda unfolds.
Supporters and Opponents
There is no clear line between
supporters and opponents of investment
migration among the political groups
in the European Parliament. Across
the political spectrum, each group
includes MEPs supporting investment
migration and other members opposing
it. In fact, geographic origin is more
important than political affiliation.
Representatives from Northern
and Western member states tend to be
more critical of the industry than their
Southern and Eastern counterparts.
There are, of course, some exceptions. For
example, there are a few vocal Southern
MEPs, often from opposition parties,
who also oppose investment migration.
Opponents usually argue that countries
with investment migration programmes
profit from selling access to the EU. This
view overlooks the fact that almost all
member states grant citizenship and
residency to foreigners based on financial
contributions, even if they have no official
investment migration programme in place.
Meanwhile, several MEPs from
Eastern and Southern member states
view investment migration in more
favourable terms. They understand the
threats but also the benefits. In recent
debates, they have helped identify
solutions to mitigate the risks of CBI
and RBI programmes, while preserving
the right of member states to operate
and regulate investment migration.
Comparison with other
International Institutions
The EU is a lot more critical about the
investment migration industry than other
international institutions. The reason
for this is that the remit of the European
Union is much broader and its nature
much more politically dynamic than
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