The EU needs to be empowered with properly vetting golden visa programmes and overseeing free ports and special economic zones to ensure conformity with anti-money laundering rules.

These were some of the most important conclusions to come from experts who were quizzed by MEPs during Monday’s hearing of the TAX3 committee dedicated to looking into the dangers posed by golden visa programmes granting citizenship in exchange of investment and by the illicit activities which take place thanks to free ports and special economic zones.

Golden visas

During the first panel on golden visas, experts pointed out the lack of exchange of information between member states, corruption, the ever-lowering requirements to obtain citizenship, lack of due diligence, and the untransparent distribution of the revenues as some of the main problems posed by the programmes.

Luděk Niedermayer (EPP, CZ), one of the two co-rapporteurs, raised the issue whether golden visa programmes, if they should exist at all, should not be targeting people who can really add value to the host economy rather than those who simply bring in a basic cash investments through property and bond purchases. He contended that the programmes were underpinned by the wrong logic - focussing on bringing in cash to the country rather than being a tool to fuel the long term prospects of the country’s economy.

Jeppe Kofod (S&D, DK), the second co-rapporteur, doubted the extent to which the programmes were leading to real investments being made in the national economies. he also expressed his worry regarding the lack of information exchange between the member states which could lead to individuals obtaining citizenship in one member state after having been refused in another.

Free ports and special economic zones

During the second panel, the invited experts decried the secrecy, lack of intelligent use of available data, and low enforcement of existing rules. Despite the significant progress of new legislation aimed at combatting money laundering, the enforcement of these laws to actors involved in free ports and special economic zones remained poor, they argued.

Mr Niedermayer asked what specific steps now needed to be taken and which authorities would be best tasked with ensuring compliance. Mr Kofod asked whether it was not time to establish a European FBI to fight crime and to what extent was it possible for on site inspections to be carried out under the existing rules.

You can watch the hearing again here. All relevant documentation on the hearing can be found here.

Background

Following continued revelations over the last five years (Luxleaks, the Panama Papers, Football leaks and the Paradise papers), the European Parliament decided to establish a Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance (TAX3), on 1 March 2018. During its twelve-month mandate, the committee will examine and assess whether further progress has been made in combatting financial crimes, tax evasion and tax avoidance. To do this, numerous hearings with experts and fact-finding missions are being organised regularly. The committee will conclude its work with a report containing its findings and recommendations. The co-rapporteurs are Luděk Niedermayer (EPP, CZ) and Jeppe Kofod (S&D, DK).