Multi-speed Europe

Brussels, 23 January 2019What are the main risks of investor residence schemes identified by the Commission?   Security risks: In a Schengen area without internal border controls, it is particularly important to ensure that the commonly agreed security checks are fully implemented, for example through centralised information systems such as: the Schengen Information System (SIS); the Visa Information System (VIS); EURODAC and the newly established Entry/Exist system (EES); and the Electronic Travel Information and Authorisation System (ETIAS). Member States must ensure that investor schemes do not undermine and jeopardise these security efforts by allowing them to circumvent these security checks. The Commission's report has identified both a lack of available information and an important level of discretion in the way Member States approach security checks. For these reasons, the Commission will closely monitor compliance of existing investor residence schemes with EU law to ensure that all obligatory existing border and security checks are systematically and effectively carried out by Member States.   Money laundering: Member States should ensure that funds paid by investor citizenship applicants are assessed according to the EU anti-money laundering rules. This includes enhanced customer due diligence checks on non EU-nationals who apply for residence rights and, as with other higher risk financial transactions or activities, full transparency around the residence schemes to ensure the integrity of funds entering the Union financial system. Member States should also ensure that authorities running investor residence schemes have an obligation to check the origin of funds in investors' schemes.   Impact on EU law on legal migration: Residence permits obtained by investment but with limited or no required physical presence of the  investor in the Member State in question could have an impact on the application of and rights associated with the EU Long-Term Residence Status. In the absence of an effective monitoring of continuity of residence, investors considered to be residing in a Member State on the basis of a national permit for five years could acquire EU Long Term Resident status and subsequent rights, in particular mobility rights, without fulfilling the actual condition of continuity of residence for five years. This would not be compliant with the Long-Term Residence Directive.   Fast-track to citizenship: Sometimes, a residence permit obtained by investment and without requiring any physical presence may provide fast-track access or a link to permanent residence and then citizenship. In Member States that have both investor citizenship and residence schemes, the investment required for the residence scheme may be taken into consideration to qualify for the investor citizenship scheme.   Tax evasion: There is a risk that the use of investor residence schemes may facilitate abuse as the documentation issued under some of these schemes can make it difficult for financial institutions to correctly identify the legitimate place of tax residence. This is whyMember States should make use of the available tools in the EU framework for administrative cooperation in the context of tax avoidance, in particular for exchange of information. The Commission will monitor wider issues of compliance with EU law raised by investor citizenship and residence schemes and it will take necessary action as appropriate. For this reason, Member States need to ensure, in particular, that:         All obligatory border and security checks are systematically carried out;         The requirements of the Long-Term Residence Permit Directive and the Family Reunification Directive are properly complied with;         Funds paid by investor citizenship and residence applicants are assessed according to the EU anti-money laundering rules;         In the context of tax avoidance risks, there are tools available in the EU framework for administrative cooperation, in particular for exchange of information. The Commission will monitor steps taken by Member States to address issues of transparency and governance in managing these schemes. It will establish a group of experts from Member States to improve the transparency, governance and the security of the schemes. That group will be tasked, in particular, with:      Setting up a system of exchange of information and consultation on the numbers of applications received, countries of origin and on the number of citizenships and residence permits granted/rejected by Member States to individuals based on investments;     Developing a common set of security checks for investor citizenship schemes, including specific risk management processes, by the end of 2019. Investor citizenship ("golden passport") schemes What are investor citizenship schemes?