Global Witness, an NGO focused on exposing corruption as well as human and environmental rights abuses worldwide, has published two separate reports indicating that ‘golden visa’ programs and the lack of beneficial ownership reporting by EU countries are enabling a host of crimes including money laundering, organized crime, and tax evasion.
Beneficial ownership reporting is government-sanctioned reporting on who-owns-which companies to both expose anonymously owned companies and keep the private sector accountable to the public.
Golden visa programs are government-sanctioned programs by certain Member States that allow for citizenship and passports to be granted to foreign nationals in return for significant investment in the respective Member State. They are interchangeably called ‘golden visa’ and ‘golden passport’ schemes.
The GW report about golden visas highlights that:
- EU golden passport and visa schemes are still ongoing despite the European Parliaments’ calls for all existing schemes to be phased out.
- No Member State has ended its investor citizenship scheme, and in fact some have hit new highs in the numbers of applications approved.
Bulgaria, Cyprus, and Malta have ‘golden passport’ schemes that do not require residency; all three have come under harsh criticism for operating such citizenship practices. The EC and EP have both called for the removal of the programs.
“Becoming a citizen of one Member State also means becoming an EU citizen with all its rights, including free movement and access to the internal market. People obtaining an EU nationality must have a genuine connection to the Member State concerned. We want more transparency on how nationality is granted and more cooperation between Member States. There should be no weak link in the EU, where people could shop around for the most lenient scheme,” said Commissioner for Justice, Consumers and Gender Equality, Věra Jourová.
The GW report about beneficial ownership highlights that out of 27 Member States:
- 17 (63%) do not have a publicly accessible centralized register for the ownership of companies.
- 5 (18.5%) have a centralized register for the ownership of companies but have significant restrictions that hinder their usefulness in combatting money laundering.
- 5 (18.5%) have centralized registers that are both free and publicly accessible. The UK is among these countries.
According to the reports, a lack of reporting beneficial ownership of countries stifles the investigations of law enforcement, inhibits public knowledge, and restricts the efforts of investigative journalists.
After the revelation of the Panama Papers in 2016, all Member States agreed that greater scrutiny from investigative journalists and civil society organizations will help prevent further abuse of anonymous companies by the corrupt and criminal. However, the EU still has not implemented EU-wide measures to combat the problem.