Komunità Malta replaces IIP agency in revamped citizenship sale rules

New rules require five-year ‘monitoring’ of new citizens and removes discretion of minister to overlook unfulfilled criteria

The Maltese government is reforming rules for citizenship-by-investment, and is changing the former Individual Investor Programme Agency to Komunità Malta.

In January 2021, the new agency will adminsiter all citizenship applications, allowing legal Malta residents to become citizens by applying after three years of residence, whereas citizenship-by-investment will become eligible after one year of residence.

Former IIP applicants did not require physical residence in Malta.

The move comes in the wake of an infringement action by the European Commission on Malta’s citizenship-by-investment scheme. “This reform is without precedent in Malta and we will keep safeguarding European values with rules that go beyond those employed by other member states,” parliamentary secretary Alex Muscat said.

Malta has to send the European Commission a formal reply to the letter of formal notice on the IIP. “We will use all legal measures to defend our national interest and sovereignty,” Muscat said.

Parliamentary Secretary for Citizenship Alex Muscat insisted the country was not ready to give up its right of deciding who should be granted Maltese citizenship, which was the source of a lucrative contribution to the national fund for social development.  

Over years, the IIP generated around €1.5 billion for the national coffers, with the junior minister outlining its contribution to the economy. He said that Malta’s programme was among the most regulated in the EU, but is often singled out for negative publicity, and said the European Commission’s criticism of the programme was “mostly political”.

The new rules take on seven recommendations from the EC, which comprise: applicants cannot apply for citizenship immediately after gaining legal residence in Malta; they will only apply after three years, except in cases of citizenship-by-investment, where they can apply after one year.

They will have to pass through a rigorous due dilegence on all adult members of the applying families, which will include verification on source of wealth, and other anti-money laundering controls.

There will be a transfer of information with the Egmont network and other EU agencies to fight money laundering. This will include ensuring source of wealth verification. There will be no time limits on due diligence undertaken by the government agency.

There will be a cap on applicants for citizenship-by-investment of 1,500, and not more than 400 each year.

Agents who sell Maltese citizenship will be regulated by a subsidiary law that will only allow lawyers, auditors, accountants and licenced corporate services providers as agents to ensure compliance with money laundering rules. They will be subject to annual due diligence reviews.

‘Aggressive’ promotion of citizenship sale will be prohibited, and make it incumbent on agents to report breaches of rules or fraud on clients presented for citizenship-by-investment.

New monitoring of such citizens will be carried out for five years after acquiring citizenship.

Ministers will no longer be empowered to award citizenship to people who do not fully satisfy legal criteria as previously allowed under the IIP.

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