Malta citizenship by investment programme to further reaffirm its high repute

Regarded as one of the most reputable citizenship by investment programmes, in particular thanks to its high due diligence standards, Malta Individual Investor Programme is likely to undergo further refinement, as a call for proposals has been launched by the government.

According to Dr Jean-Philippe Chetcuti, managing partner at Chetcuti Cauchi Advocates and first accredited agent of Malta’s IIP scheme, these changes might imply stricter due diligence procedures, publication of statistics of unsuccessful applications, revision of “genuine link” criteria, and opening of the authorised market concession.

Dr Chetcuti believes that Malta’s IIP programme should keep building on the existing high standards of due diligence. The strengthening of compliance rules and regulations in line with international legal concepts, with exhaustive background checks, would ensure stronger, more transparent governance, and further mitigation of risk for the protection of the state.

Additionally, the publication of statistics of rejected applications would give the programme more accountability and transparency, while a number of identifiable procedural improvements would result in a more streamlined efficiency. The platform’s robust legal framework would further ensure a reputable programme, eliminating any doubts about its legitimacy. Essentially, both the positive and negative impacts of the MIIP should be made visible, thus creating an environment, where public debate on the programme is more objective.

One of the most controversial moot points of the programme is the requirement of physical presence in Malta. In 2014, amendments to the Maltese Citizenship Act (LN450 of 2013) included the introduction of a genuine link with Malta via effective residence status (a period of at least 12 months), which has prompted the European Commission to pronounce itself in favour of the scheme. The residence criteria can be seen as an objective factor of a relationship between the individual and the state, however, is it necessary for residence to be effective and physical in order to be considered as a link?

The application of the residence requirement in Malta is in line with the international law concept of “effective nationality”. This entails that in the interest of “global citizens” the connection with a country is deemed to be established through “personal, social and commercial links” rather than by actually living in the said country. Improvement in this area may be required, and here, Dr Chetcuti opines that a revision of the genuine link criterion might push the programme to be even more in line with this internationally-accepted concept.

“If one takes a look at both Maltese and foreign law, it is evident that physical presence is not a necessary requirement for one to obtain citizenship,” he said. “For instance, thousands of Argentinian nationals obtain Italian citizenship by descent without setting foot in Italy; over half a million individuals, whose ancestors lived in the Austro-Hungarian Empire, obtained Hungarian passport.”

Finally, the opening of the authorised market concession could be the most fitting leap towards optimising the MIIP. Dr Chetcuti held that the selection of Authorised Marketing Agents should be based on the firms’ track record of securing foreign investment on a consistent basis and not only on obtaining Maltese citizenship after a mere one-time contribution. It should instead be based on a firm’s mind-frame to promote Malta, a safe jurisdiction with an ever-flourishing economy, as the ideal destination for foreign direct investment. When this is coupled with Malta’s resolve to be a pioneer in numerous niche sectors (such as online gaming), as well as prominent leaps forward in the fintech sector by accommodating new world business models, including blockchain and crypto-currencies, the argument that Malta is the perfect destination is not a difficult one to make.