Golden passports: Brussels’s genuine link argument risks falling apart

The European Court of Justice’s advocate general’s opinion in Brussels’s case against Malta’s golden passport scheme may have dealt the investment migration community a winning hand.

The Investment Migration Council, a lobby of major firms invested in the sale of citizenship, said an AG opinion that questioned Brussels’s move to take Malta’s sale of citizenship to the ECJ, was a “very strong message to the court”.

“It is worth noting that opinions are sometimes cited more than cases,” IMC chief executive officer Bruno L’ecuyer told MaltaToday. “We acknowledge the media interest surrounding the EU v. Malta case. While we respect the court’s eventual decision, regardless of the outcome, the AG’s opinion is a very strong message to the court.”

Other critics of the European Commission’s action against Malta believe Brussels has overreached on its powers to whip a small member state into submission over the sale of citizenship, as some members of the Maltese citizenship-by-investment community told this newspaper.

L’ecuyer, a co-founder of the IMC, said his lobby has been dedicated to establishing and promoting global standards on the sale of citizenship while providing qualifications in investment migration, in collaboration with governments and policymakers and the EU.

In identifying the potential acquirers of an EU passport as the likely perpetrators of financial crimes, L’ecuyer suggests Brussels misreads the way any such wrongdoer – golden passport or not – is dealt with by EU law.

“It is essential to acknowledge that in May 2024, the European Council approved a comprehensive legislative package targeting anti-money laundering (AML) and countering the financing of terrorism (CFT). These regulations represent a significant shift for investment migration, which is now integrated into a broader regulatory framework. This new reality places investment migration alongside other established sectors that are subject to stringent and necessary AML procedures,” he said.

Genuine links only for CBIs

Malta has always insisted that EU citizenship is contingent solely upon national citizenship – and that any competences not explicitly granted to the Union are retained by the Member States. So, laws that are the exclusive jurisdiction of the member state, such as citizenship, can never be transferred to the EU. Even the EU’s Court of Justice has given wide berth to members states in setting their own terms on defining nationality for its citizens (Micheletti line of cases).

The Commission on the other hand, claims EU citizenship when acquired based on payment, “is incompatible with the principle of sincere cooperation”, the latter forming part of the Treaty of the EU, claiming further that ‘sincere cooperation’ demands a genuine link between the elites buying their golden passports and Malta.

The question is why citizenship by descent, or through special achievements does not get the same scrutiny by the EC? The AG’s opinion thinks this betrays the Commission’s inconsistency on when member states’ citizenship laws might affect internal security concerns.

Supporters of CBI programmes insist that the EU’s concern with the risks of financial illegalities tied with golden passports, is misdirected and that is the phenomenon of freely moving capital and interconnected transactions that facilitates illicit finance. Malta’s response to the European Parliament resolutions and the Commission’s case in the ECJ, eventually led to further reforms of the former Individual Investor Programme, for the strengthening of due diligence on these applications.

European Court of Justice

Blood or no blood

There can be a thin line between the alleged perils from naturalised citizens based on blood criteria; and those who acquire a golden passport without any profound affinity to a destination country – what Prof. Dmitry Kochenov, a past consultant for CBI supremos Henley, dubbed as “fetishising blood as the paragon for building a just human society.”

The point is there are many instances where ancestral lineage allows foreigners to acquire citizenship – as in the case of Australians with Malta, or South Americans with Italy – simply to gain access to the European Union without any real genuine link such as residence, birthplace or income.

Little then is said about the alternative ways in countries can accord citizenship by recognising individuals who make contributions in fields such as science, arts, culture, sports, or economics – the national Maltese football team has at least five such footballers in its starting 11.

So, the question for Brussels is why; in pursuing its Malta challenge over the absence of a “genuine link” for golden passport holders, does it not raise the same alleged links of naturalised EU citizens who obtained citizenship by dint of their intellectual, non-economic contributions.

For this makes the latter mode of citizenship acquisition far more discretionary, reflecting the opportunistic gains of the granting state, without applying the same stringent due diligence procedures as those for CBI or golden passport applicants.

And if CBI programmes are alleged to enable actors seeking new markets to further crimes of money laundering, tax evasion or corruption, how is this problem of economic illegality even addressed in the case of the far higher number of blood-naturalised citizens in the EU?

Bruno L'Ecuyer

‘Genuine link’ a political choice

In his opinion, the CJEU’s Advocate General explores the central point of contention around the existence and necessity of a “genuine link” between an individual and a member state for the granting of citizenship – which Brussels claims exists as a basis for mutual trust underpinning EU citizenship; Malta refutes this requirement.

The Commission argues that although member states determine their nationality rules, EU law limits this competence to prevent actions undermining EU citizenship. By facilitating the grant of golden passports, Brussels says Malta compromises the integrity of EU citizenship and the principle of sincere cooperation.

Malta defends the scheme as falling under its sovereign right to attract wealth and shape its national identity – a “prior genuine link” is a political choice, not an international or EU law obligation.

The Advocate General concludes that neither EU law nor international law explicitly mandates a “genuine link” for granting nationality. While EU law restricts the arbitrary withdrawal of nationality and may consider a ‘genuine link’ in those situations, it doesn’t impose such a requirement for acquiring nationality. “EU law does not define, much less require, the existence of such a link… in order to acquire or to retain that nationality.”

The Advocate General’s Opinion, while not binding, carries significant weight. The Opinion favours Malta, emphasising the lack of an explicit “genuine link” requirement in EU law for acquiring citizenship. This could potentially have ramifications for other member states with similar citizenship schemes. However, the Court is not obliged to follow the Advocate General’s Opinion.