A new cash-for-passports scheme is likely to be launched later this year and applicants may be forced to spend more on the property they must buy or rent.

Parliamentary secretary for citizenship and communities Alex Muscat outlined the government’s plans for the controversial Individual Investor Programme in an interview with The Sunday Times of Malta.

Launched in 2014, the IIP had been capped at 1,800 main applicants. According to Mr Muscat, more than 70 per cent of this allocation has been reached.

“At this rate, the programme will have been exhausted within months,” he said, pointing out that Prime Minister Robert Abela had already committed himself to retaining it.

The Chamber of Commerce, he noted, recently pronounced itself for the programme to be extended or a new one to be rolled out.

“Given that the scheme has raised over €1.3 billion in revenue, how long can the country afford to wait for the second programme to start?” he questioned.

“Personally, I am in favour of launching it straight away to avoid having a gap in revenue. We are looking at a scenario in which the new programme will be rolled out later this year.”

But is a €350,000 property or an expenditure on annual rent of €16,000 – the minimum requirements for IIP applicants – such a big deal nowadays?

Mr Muscat conceded that these thresholds might have made sense when the programme was drafted in 2013 but, in the context of the property boom, which has seen prices soar, there was a case for an upward revision.

As for the reason why most successful applicants were opting to rent rather than buy, he said it was probably due to the fact that it did not require as much red tape and was a more expedient process.

It was pointed out that his urgency over starting a new programme seemed to contradict the finance minister’s repeated assurances that the budget was not dependent on IIP revenue.

There was no such contradiction, he said.

“Without the programme, public finances would still be very strong and Malta’s economy is not dependent on the sale of passports. But it would be presumptuous to say the country should refuse this additional stream of revenue.”

In the last financial year, the IIP accounted for over €270 million in revenue and this, he said, was contributing to various infrastructural projects in areas like roads and education. Only 30 per cent of the revenue was going towards the annual budget while the remaining 70 per cent was put into the National Development and Social Fund, which had reached nearly €600 million.

However, the government’s decision to finance a €50 million social housing programme from this fund has prompted criticism that government’s expenditure is dependent on the IIP.

Again, Mr Muscat insisted this was not the case.

“Social housing is not dependent on the sale of passports but is being aided by it,” he said. “The IIP means that certain capital expenditures can be made sooner rather than later.”

One of the most controversial aspects of the individual investor programme has always been the residency clause, whereby applicants need to show some sort of genuine link with Malta in order to allay concerns of having ulterior motives for buying a passport.

Main applicants are meant to be in Malta physically for the entirety of 12 months before taking the Oath of Allegiance, and questions are frequently raised on how this provision is being enforced.

Asked if controls would be tightened, Mr Muscat insisted Malta was one of the few countries that “enforced” the residency aspect.

“Applicants are required to submit boarding passes as proof of having entered or left Malta.”

Further enforcement was “tricky” in the wake of the fact that European laws did not impose restrictions on free movement.

“Having no such impediment imposed on us as a member state, we cannot introduce such restrictions either,” he said.

Other changes in the pipeline to “strengthen” the programme are a legal obligation to have a register of accredited agents and clearer provisions on how to suspend or revoke a licenced operator.

“We are also looking at further due diligence obligations on agents, and even to have certain checks and balances in place for a fixed period of time on successful applicants,” he said.

“Should an agent became aware of certain issues, why should they not be obliged to flag the matter?”

He pointed out that the authorities had started proceedings to revoke citizenship for three successful IIP applicants.

“This action was taken on the strength of information which emerged later.”

Last October, Opposition MP Karol Aquilina had denounced what he had described as “fake due diligence”. He listed five names of foreigners who, shortly after obtaining a Maltese passport, made headlines for the wrong reasons.

Yet, Mr Muscat said the bottom line was that Malta’s “rigid” due diligence regime meant that it had the lowest acceptance level in Europe at around 76 per cent of applicants, in contrast to the UK at 91 per cent, Latvia 98 per cent and Hungary at 99 per cent.

“There were cases in which applicants who were rejected for Maltese citizenship on the strength of our due diligence regime were accepted in other member states.” And there were no applicants who were accepted under the IIP after having been rejected elsewhere.

Noting that neither the Venice Commission nor MoneyVal had expressed themselves against the IIP, he said Malta was the only country which had an independent regulator as watchdog.

Asked why the government was publishing the names of successful IIP applicants only together with thousands of others who acquired Maltese citizenship through other means, Mr Muscat insisted that only Malta and Austria ‘published’ the names.

“There are data protection issues as one would be making distinctions between IIP applicants, naturalisations and those who got married,” he said.

“I don’t agree we should make such a distinction.”

Source: timesofmalta.com
Published: 16 February 2020