LONDON  - The European Union is far too open to dodgy tycoons. Brussels said on Wednesday that so-called golden passport or visa schemes run by many member states risked assisting money launderers and tax evaders. The concerns about selling citizenship or residency are justified, but since national governments are the only ones with the power to close these back doors, there is little hope of speedy action.

The European Commission’s 25-page report on the problem landed five years after the EU parliament first expressed worries. And the next step is setting up a panel of experts rather than tough action. The EU executive says the subject is complicated and there is a paucity of official data on how many such passes are issued. Only Malta and Austria publish lists of new citizens or residents, according to anti-corruption group Transparency International (TI), which estimates such programmes have sucked in 25 billion euros worth of investment over the last decade.

Opacity is, however, a warning sign, especially since small countries like Malta are not the only offenders. Britain issued 1,172 “investor” visas in 2014, when applicants were subject to no background checks. That number dropped to 192 in the following year, after the introduction of basic screening. And there is anecdotal evidence of golden visa beneficiaries with colourful pasts. Britain’s first use of an “unexplained wealth order” in October against Zamira Hajiyeva, the wife of an Azeri banker jailed for corruption, revealed that she had arrived in the UK on an investor visa in 2010, according to UK media reports.

The EU’s problem is that it cannot tell member states who can and cannot get a passport or visa just as it has struggled to ensure high anti-money laundering standards are maintained in all banks across the bloc. And for the likes of Cyprus and Malta, passports and visas are a big business. Malta has garnered 718 million euros in investment through citizenship sales since 2014, TI says. That’s 7 percent of its GDP. When there’s so much at stake, millionaires can count on porous borders.

CONTEXT NEWS

- The European Commission said on Jan. 23 that programmes of some member states to sell passports and visas to wealthy foreigners could help criminal groups infiltrate the bloc and raise the risk of money laundering, corruption, and tax evasion.

- Cyprus, Malta and Bulgaria are the only EU countries to sell citizenship, issuing passports in return for investment of between 1 million euros and 2 million euros. They and 17 other countries, including Britain, Spain, Portugal and France, offer "golden visas" that grant residency rights in return for investment.

- The European Union has in the past decade acquired 6,000 new citizens and 100,000 new residents on this basis, according to an October 2018 report by anti-corruption group Transparency International (TI).

- Such schemes have generated 25 billion euros of investment inflows for EU member states, TI estimates.

(Editing by Swaha Pattanaik and Bob Cervi)

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