The European Commission has reported that certain visa-free countries operating investor citizenship schemes may pose a security threat to the EU. A recent report by the EU highlights the fact that the investor citizenship schemes or citizenship-by-investment programs, also commonly referred to as golden passports run by third countries with visa-free access to the EU may present a number of security risks for the EU.

The report highlights the main challenges in the areas of irregular migration and security linked to the functioning of visa-free regimes and the main shortcomings of the current visa suspension mechanism, setting out a consultation process on the possible ways to address those challenges and improve the mechanism.

The Commission is monitoring all visa-free third countries operating investor citizenship schemes. At the moment, a number of visa-free third countries are under close scrutiny due to the potential risks raised by their investor citizenship schemes, or their plans to establish such schemes.

According to the panel, it is worried that golden passports may be facilitating “the infiltration of organized crime, money laundering, tax evasion, and corruption.”

The European Commission stated in a proposal asking the European Parliament to pass new legislation: “The EU should have the possibility to suspend the visa exemption for a third country that chooses to operate an investor citizenship scheme whereby citizenship is granted without any genuine link to the third country concerned.”

A key threat identified by the report was from identities being changed. According to the committee, anyone who obtained a second citizenship was permitted to adopt new names and identities.

Golden Passport plans provide citizenship privileges in exchange for local investments or a fixed fee, with minimal or no residency requirements, weak security checks, and no genuine connection with the third country in question. The third countries concerned often advertise those schemes as ‘golden passports’ with the express purpose of allowing visa-free travel to the Union to third-country nationals that would otherwise be visa-required. Such schemes can allow their beneficiaries to bypass the regular Schengen visa procedure and the in-depth assessment of individual migratory and security risks.

Since 2020, the Commission has been engaging with the five Eastern Caribbean states operating investor citizenship schemes (Antigua and Barbuda, Dominica, Grenada, Saint Kitts and Nevis, and Saint Lucia) to obtain relevant information and data on those schemes, which are classified as potentially posing a high-risK.

The short processing times, low fees, high number of applications and low rejection rates, suggest that the operation of such schemes could pose certain risks for the security of EU Member States. The fact that successful applicants are then allowed to change their identity once the new nationality is obtained raises further potential security risks.