In a landmark ruling in April 2025, the European Court of Justice declared the Maltese "golden passport program" to be incompatible with the Member State's obligations to the European Union. The programme commercializes the granting of European citizenship, thus undermining mutual trust between Member States and violating the principle of sincere cooperation.
With the end of the "golden passports", media attention is shifting to the "golden visas". Although such programs may be compatible with EU law, they are by no means immune to the risk of abuse. This is where the EU comes in with its money laundering package adopted in May 2024 and now regulates the "trade" in residence permits.
"Golden passports" and "golden visas": cash payment in exchange for a residence permit
Investment-based migration programs enable wealthy individuals to acquire citizenship ("golden passport") or a residence permit ("golden visa"). Although the programs differ in detail, what they all have in common is the injection of a minimum amount of capital into the economy of the issuing country as a primary qualification requirement. This is achieved through the acquisition of real estate, government bonds or company shares, among other things. In return, applicants receive citizenship or a residence permit in an accelerated procedure, which often has significantly reduced requirements compared to the regular procedure, for example with regard to the duration of residence.
In a study published in 2018, the non-governmental organizations Transparency International and Global Witness registered a total of 17 such schemes in 14 member states of the European Union. Over a period of ten years, more than 6,000 citizenships and around 100,000 residence permits were granted as a result and, in return, 25 billion euros in direct investments were generated. Especially for small member states such as Malta or Cyprus, these programs have made a significant contribution to the development of the location.
Misuse of investment-based migration programs
In their joint report from 2023, the Financial Action Task Force and the Organization for Economic Co-operation and Development (OECD) highlighted the risks of abuse of investment-based residency and citizenship programs. The programs are susceptible to bribery and corruption and are likely to support applicants in money laundering, tax evasion and sanction evasion. Even though applicants must regularly prove the legal origin of their investment funds, the due diligence procedures carried out by the responsible authorities are often inadequate. These checks are also regularly outsourced to external agencies, which opens up further opportunities to exert influence.
Barbara Scheben
Partner, Audit, Regulatory Advisory, Head of Forensic, Head of Data Protection
KPMG AG Wirtschaftsprüfungsgesellschaft
Investment migration consultancies are now obliged entities under money laundering law
In response to the risks identified, the European legislator issued the Money Laundering Regulation in May 2024 and thus decided to include investment migration consultancies in the group of entities subject to money laundering obligations.
Investment migration consultancies represent third-country nationals or provide them with intermediary services aimed at acquiring residence rights in a member state in return for an investment of any kind (including gifts). The regulation applies equally to natural and legal persons who provide such services on a commercial basis.
According to the recitals, the regulation does not apply to the investment-based acquisition of citizenship. In a recommendation, the Commission set out its view that "golden passport" programs violate EU law.1 Consequently, the Commission initiated infringement proceedings against the member states Malta and Cyprus back in 2020. While Cyprus has since discontinued its program, the Commission's position has now been confirmed in the proceedings against Malta.
The new requirements at a glance
Investment migration consultancies are faced with extensive requirements. Their new duties include
- Carrying out a risk analysis to identify and assess the specific risks of money laundering and terrorist financing,
- Developing internal policies, procedures and controls,
- setting up a compliance function,
- checking the reliability of their employees and
- reporting suspicious cases to the Financial Intelligence Unit.
In addition, they must identify their clients and determine whether they are politically exposed persons or persons subject to targeted financial sanctions. Depending on the risk class - which is likely to be classified as high on the basis of the business activity - further checks may also be required, for example on the origin of the assets.
This transitional period applies
Investment migration consultancies now have until 10 July 2027 to prepare for their new obligations. As they are confronted with the requirements of money laundering law for the first time, it is advisable to deal with them at an early stage. In particular, carrying out a risk analysis for the first time and setting up an appropriate and effective risk management system are challenging. The necessary structures, personnel and material resources as well as databases must be created from scratch.
If you have any questions about the requirements of the Money Laundering Ordinance and the associated obligations, please do not hesitate to contact us. We look forward to hearing from you.
1 Cf. Art. 4 para. 3 of the Treaty on European Union in conjunction with Art. 20 of the Treaty on the Functioning of the European Union. Art. 20 of the Treaty on the Functioning of the European Union
