A blacklist of 21 countries whose so-called “golden passport” schemes threaten international efforts to combat tax evasion has been published by the West’s leading economic thinktank.
Three European countries – Malta, Monaco and Cyprus – are among those nations flagged as operating high-risk schemes. They either sell residency or citizenship in a report released by the Organisation for Economic Cooperation and Development (OECD).
In exchange for donations to a sovereign trust fund, or investments in property or government bonds; foreign nationals can become citizens of countries in which they have never set foot on.
Other schemes, operated by the UK, offers residency in exchange for sizable investments.
The Paris-based body has raised the alarm about the fast-expanding £2.3bn citizenship by investment industry. This has basically turned nationality into a marketable commodity.
Malta is probably the most popular as it is a part of the European member. The advantage is that people who buy citizenship, can live and work anywhere in the EU. Since 2014, the country has sold citizenship to more than 700 people; most of them being from Russia, the former Soviet bloc, China and the Middle East.
Second passports can be misused by those wishing to “hide assets held abroad”. Its flagship initiative is a framework for countries to cooperate in the fight against tax evasion by sharing information. Known as the Common Reporting Standard, the framework allows for bank accounts details an individual might hold abroad to be sent to their home tax office.
A joint report published by the Transparency International and Global Witness describes how the EU had gained nearly 100,000 new residents and 6,000 new citizens in the last decade. This due to the poorly managed arrangements that were “shrouded in secrecy”.
“Schemes can potentially be abused to misrepresent an individual’s jurisdiction of tax residence,” the OECD warned.
Concerns are growing rapidly among political leaders, law enforcement and intelligence agencies that the schemes are open to being misused by criminals and sanctions-busting business people.