“Golden Visas” Halted by EU’s Top Court Over Money Laundering, Corruption Risks
The topic of “Golden Passports” and “Golden Visas” dominated international headlines over the last week, this following a recent, controversial decision levied by the supreme court of the European Union (EU) against a foreign tax haven. Known by the more politically-correct moniker of Citizenship by Investment (CBI) or Residency by Investment programs, these government-backed practice grants citizenship and/or residency to foreign investors in exchange for these entities making a significant investment within the country – effectively expediting (if not completely bypassing) normal migration processes in exchange for spurring the country’s economic growth.
Through this process, the investor pool (which historically has included politically-exposed persons and criminals from across the globe) invest funds of both licit and illicit origins in the tens-to-hundreds of thousands of dollar range into approved vehicles such as luxury real estate properties, national development funds, or government bonds, which are subjected to even less scrutiny than funds invested into a traditional financial institution. While not a novel phenomenon at the international level (the original golden passport program began in 1984 in St. Christopher and Nevis in an effort to boost the country’s economy during an economic recession), golden passport programs have garnered attention from domestic and foreign government agencies due to the vulnerabilities they create with respect to money laundering and political corruption. This is due to a number of varying factors including lax regulatory oversight, minimal-to-no KYC checks performed by the parties involved, and limited verification of sources of funds used for initial subsequent investment. This coupled with high investment thresholds mandated by the countries offering these programs as a prerequisite, along with the use of intermediaries like law firms and real estate agents on behalf of the investor to further conceal their identity during this process makes for a quick and easy method to launder large sums of ill-gotten cash without detection. Further, granting citizenship to an individual with a checkered past virtually provides them with a new identity, further complicating any due diligence or sanctions enforcement measures currently in place within these realms, while also potentially allowing investors to open financial accounts and make various purchases without triggering detection in their home countries.
Over 100 countries worldwide across a total of five continents had at some point offered golden visa programs, the most popular being bigger players at the international level such as Greece, Portugal, Spain, Malta, and the UK. This list also at one time included over 60% of EU member states. Given the scope of this practice and the elevated financial crime risks associated with it, changes appear to be on the horizon that will impact the ability to maintain such means moving forward. Last Tuesday, the Court of Justice of the European Union (CJEU) ruled that Malta must end its golden passport program, deeming that such a scheme infringes upon current EU law. Malta’s respective program had previously allowed foreign nationals to purchase their citizenship in exchange for a whopping €700,000 investment – a major fundraiser for a country synonymous with illegitimate financial activity (see the fallout of the Panama Papers saga). The European Commission had previously taken Malta to court over the program in 2022 due to the inherent money laundering and security risks brought to the EU through use of such programs, with individuals holding a Maltese passport allowed to live and work in any EU country under the previous parameters of their scheme. The EU Court of Justice decision also specified that a member state could no longer issue a passport unless an applicant had a “genuine link” to the nation.1 Bloomberg provides the example of Portugal “requiring golden visa holders to spend 14 days in the country every two years to maintain residency”, while allowing investors to apply for a passport after five years.1
This “commercialization…is incompatible with the basic concept of [EU] citizenship as defined by the [bloc’s] treaties,” read a statement from the 13 judges collaborating on the ruling. “It infringes the principle of sincere cooperation and jeopardizes the mutual trust between member states.”2 While opposed to the ruling, representatives of the Maltese government stated they will now search for ways to bring this citizenship program – which had generated over 1.4 billion euros ($1.6 billion) for the national economy and funded various functions such as social housing, healthcare, sports and culture – in line with the judgment.3 Malta was reportedly the last EU member country with an investor citizenship scheme, as Cyprus stopped accepting new applications at the end of 2020 and is currently investigating citizenships it had previously granted.3
Given that this decision came from the EU’s highest court, analysts predict this ruling could have a ripple effect on countries outside of the EU with similar programs still in effect. For now however, immigration lawyers and financial advisers have begun to urge their clients seeking golden visas within EU countries such as Portugal, Greece and Italy – which offer residency (versus direct citizenship) on the grounds of investment – to do so expeditiously or risk facing additional costs or being totally barred from doing so in the very near future.
Citations
- Almeida, Henrique. “Golden Visa Brokers Advise Clients to Hurry after Malta Ruling – Bloomberg.” Bloomberg, 2 May 2025.
- “EU’s Top Court Declares Malta’s ‘Golden Passports’ Scheme Unlawful.” ACAMS Money Laundering, 29 Apr. 2025.
- Van Campenhout, Charlotte, and Bart Meijer. “EU Top Court Rules against Malta’s Golden Passport Scheme | Reuters.” Reuters, Thomson Reuters, 29 Apr. 2025.