March 5, 2018 / 12:12 PM / 8 months ago

EU schemes to sell visas risk undermining free movement area: watchdogs

BRUSSELS (Reuters) - Programs run by some European Union countries to sell visas and citizenship to wealthy individuals could undermine the bloc’s free-movement area as they are vulnerable to abuse and graft, two anti-corruption watchdogs said on Monday.

European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium, January 18, 2018. REUTERS/Francois Lenoir

Government schemes to trade citizenship or residence rights for investment have been applied in at least 10 European countries that are part of the Schengen free-movement area: Austria, Belgium, Greece, Latvia, Lithuania, Malta, Portugal, Spain, Hungary and Switzerland.

Hungary suspended its scheme last year. Similar programs are also run in other EU countries outside the Schengen zone, including Britain, Bulgaria and Cyprus.

“There is growing concern about the risks these schemes pose to the integrity of the Schengen area,” Transparency International EU director Carl Dolan told a news conference in Brussels.

Visas obtained in a Schengen country can be used to travel and reside in other states of the bloc. They can also allow visa-free access to the United States.

New investigative reports release by the Organised Crime and Corruption Reporting Project (OCCRP), a media consortium, showed cases of poor governmental scrutiny over individuals who were granted EU passports or residence permits.

Transparency International said new EU citizens under these schemes include Russian nationals in Malta who are believed to be close to Russian President Vladimir Putin.

It said that several members of Angola’s ruling elite may also have qualified for the scheme through their real estate purchases in Portugal.

“It is clear that due diligence procedures in some EU countries, such as Hungary and Portugal, have not been rigorous enough,” said Casey Kelso, advocacy director at Transparency International.

The European Commission is due to publish by the end of the year a report on so-called golden visa schemes run by EU states. A spokesman said on Monday the report would offer “guidance” to EU countries on how to apply the programs.

The commission should at least set guidelines on due diligence, according to Rachel Owens of anti-corruption group Global Witness. These programs “pose systemic and high corruption risks across Europe,” she said.

Visas or residence permits are sold to wealthy individuals against investments in the issuing countries, under different financial and residence conditions.

The Maltese scheme, for instance, requires applicants to make financial contributions of at least 650,000 euros ($800,000) and an investment in selected stocks, bonds or special purpose vehicles of at 150,000 euros to be held for a minimum period of five years.

($1 = 0.8116 euros)

Reporting by Francesco Guarascio; editing by Mark Heinrich

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