Kenneth Rijock

Kenneth Rijock

Saturday, February 1, 2014

WILL MALTA'S NEW ECONOMIC PASSPORT FACILITATE MONEY LAUNDERING ?


The new Malta economic citizenship program, which seeks to raise funds needed for essential government services, and which is designed to attract high net worth residents to the island nation, could also result in an influx of money launderers who want the benefits of citizenship in an EU country.

The new regime, which requires applicants to come up with €1.15m, in cash and investments, confers benefits that are of critical interest to money launderers:

(1) Maltese citizens can travel and work in any of the 27 EU countries, without having to deal with frontier (border) formalities.

(2) Visa-free travel rights to over sixty other non-EU countries, including, the United States, the epicenter of the global financial structure.

(3) The low profile conferred by citizenship from a country that is not known for drug trafficking, rampant corruption, or organized crime.

Though a one-year residency requirement, and an effective application and qualification process, are part of the program, inventive financial professionals (read: money launderers)  will surely find "creative" ways to satisfy those requirements, and qualify their clients, without actual compliance.

Tax professionals have long taken advantage of Malta's EU status; one wonders how many financial professionals, working for criminal organizations, will flock to this new Maltese program. Given Malta's poor record on the arrest and conviction of money launderers operating there, it will need to ramp up effective law enforcement, if it aims to identify, and cull out, financial criminals who will now wish to become Maltese nationals.

I know that there is a certain amount of Maltese sensitivity to stories about money laundering in Malta, because one of my articles on the subject once drew an angry governmental response, notwithstanding that it was an accurate report on events. Since I know that my blog is read regularly in Malta, I hope that this article alerts the Maltese authorities to the probability that international money launderers will avail themselves of the country's new economic citizenship program, and ramp up their approval process accordingly.



1 comment:

  1. Hi Kenneth. This is an 'interesting' situation which is still developing and we have yet to see the final legislation coming out. Whether this will be abused or not remains to be seen but the opportunity is there . I am hoping that before granting citizenship the correct enhanced CDD will be carried out and that there will not be political or commercial pressure to grant citizenship to individuals who should not get it. There is a lot of 'commission' to be earned in introducing clients . People like Henley stand to gain millions . With only 1 year residency requirement its not difficult to get the Maltese citizenship if you have the cash. Apparently there is no need to reside in Malta for 1 full year. The final legislation is not out yet so some important details are missing. To whom may it appeal? well to anyone who has the cash and wants a EU passport so we could see the Chinese who are also eager to find away around the EU's dumping tax on solar panels and there are talks between the maltese government and the Chinese to set up a company to manufacture solar panels. The Chinese have agreed to buy a share (millions of euros). of Enemalta which is financially in a very bad state Other nationals could find this scheme interesting e.g. Russians, Ukranian's ( ex PEPs?;) )who may have quite legitimate reasons to buy it or not?

    To which article were you which angered the Maltese authorities?

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