Malta’s government and largest bank, the Bank of Valletta, have fallen under concern from the European Commission. The controversy is over the Bank of Valletta not properly monitoring applicants for Maltese citizenship under their “golden passport” program, and what the government is going to do about it.
According to Reuters, an inspection conducted by the European Central Bank last month revealed a confidential decision requiring the Bank of Valletta to take remedial action after an inspection exposed “severe shortcomings” that could have allowed money laundering or other criminal activities. The European Central Bank report stated that the Bank of Valletta registered foreign nationals applying for “golden passports” as Maltese citizens to reduce their risk profile.
These foreign nationals would be opening accounts with the Bank of Valletta to obtain citizenship from Malta’s “golden passport” scheme, which requires a total of 1,150,000 euros to be invested into the country to obtain citizenship.
“The bank is currently engaged in a transformation and de-risking exercise in constant liaison with local and international regulators. We are confident that good progress continues to be made as part of this concerted program,” said a spokesman for the Bank of Valletta.
In a letter sent to the Maltese government, Tiina Astola, the European Commission’s Director-General for Justice asked “Is there any specific follow-up given by the Maltese government to those parts of the report of the European Central Bank that concern the Individual Investor Programme?” She was referring to the passport scheme and asked for a response by January 6th.
The program came about in 2014 in an effort to attract foreign capitol into Malta, which only has a population of 420,000.
It was introduced by Prime Minster Joseph Muscat, who has announced his resignation amid controversy over an investigation into murdered journalist Daphne Caruana Galizia in 2017.
Malta is not the only EU member country with a “golden passport” scheme. Cyprus and Bulgaria also offer them, although Bulgaria has announced that they will retract their program. The European Commission’s Tiina Astola also sent a letter to Cyprus to gain clarification about 26 individuals who had their citizenship revoked due to “mistakes” in processing them and to investigate “possible misconduct” in these cases. It also asked how Cyprus intended to prevent people with high-risk profiles from getting passports in the future. A response to this letter was also requested by January 6th.