BRUSSELS — The European Commission launched infringements procedures Tuesday against Cyprus and Malta over their "golden passport" programs, in which wealthy people can acquire EU citizenship in exchange for an investment.
The EU's executive said the lucrative schemes are in violation of EU law and undermine the "essence of EU citizenship."
Cyprus recently announced that it was ending its program amid allegations that a top state official and a veteran lawmaker were trying to bypass strict vetting rules.
Cyprus says it will end its program from Nov. 1, though the Commission notes that the country plans to continue processing current applications.
The Cypriot program was introduced in the wake of a 2013 financial crisis that brought the country to the brink of bankruptcy and forced it to accept a financial rescue program from creditors. Like a similar program in Malta, it has attracted many foreigner investors because a passport from those EU countries automatically grants the holder access to the entire 27-nation European Union.
Around 4,000 Cypriot passports have been issued to investors under the program, generating more than 7 billion euros ($8.25 billion). In Malta, the program was among the topics investigative reporter Daphne Caruana Galizia had reported on before she was blown up by a car bomb while driving in 2017.
"The schemes remain in place for the time being, in both member states concerned and could be replaced by similar investment schemes" said EU Commission spokesman Christian Wigand. "Malta has in fact informed the Commission that it envisages a prolongation of citizenship foreign investment."
The commission set a two-month deadline for both countries to reply to letters of formal notice and can ultimately decide to refer the matter to the Court of Justice.
Anti-corruption watchdog Transparency International welcomed the commission's decision, saying the scheme served "corrupt interests, not the common good."
In a report last year, the commission also criticized Bulgaria for offering passports in exchange for money to investors without any real connections to the country.
Wigand said the commission has also sent a letter to Bulgarian authorities asking them to phase out their citizenship scheme and provide detailed information about the program within a month.
Transparency International asked the EU Commission to scrutinize other similar schemes across the bloc, mentioning Portugal and Austria in particular, to determine whether they are legal.