A New Agency to Administer Maltese Citizenship

Press Release by the Parliamentary Secretary for Citizenship and the Communities

Malta’s new residence regulations leading to citizenship came into force today, taking into account the recommendations put forward by the European Commission. The Malta Individual Investor Programme Agency (MIIPA) stopped receiving new applications since last August and has now closed accordingly, making way to a new agency set up to administer all Maltese citizenship-related matters – Aġenzija Komunità Malta (the Agency).

“Through the IIP, the National Development and Social Fund (NDSF) invested in social housing, healthcare equipment and improvements to healthcare centres. The programme’s importance to our country’s economy during this pandemic was significant, where it saved both the lives and jobs of Maltese and Gozitans,” Parliamentary Secretary for Citizenship and Communities, Alex Muscat.

“Therefore, we saw to strengthening such an initiative, not letting it come to an end, so that it continues to bear the desired fruits in the development of the communities in our country.”

Mr Muscat stressed that our country is not ready to give up the country’s right to grant citizenship at its own discretion. He also stressed that the new regulations have led to drastic changes from how the previous programme was managed.

Government will continue publishing the names of all applicants who are awarded Maltese citizenship for exceptional services by both merit and direct investment. Names of persons who will not be granted Maltese citizenship will also be published.

As the IIP comes to an end, we can look back and observe how the investment generated gave a big boost to the Maltese economy. In six years, the accumulated investment reached around €1.5 billion.

MIIPA will cease to operate as from January 2021. In its stead, the Agency has been created to administer all legal means leading to the acquisition of Maltese citizenship. These include citizenship by birth, by registration, by naturalisation through long term residence, for exceptional services by merit, and for exceptional services by direct investment in Malta. The Agency has the power to provide information to the Commissioner of Inland Revenue, the FIAU, the Financial Services Authority and the Police Commissioner.

The Agency also has the power to disclose information to local or foreign enforcement or regulatory authorities or police agencies.

The new legal framework, introduced in November, takes into account the European Commission’s set of recommendations:

• Applicants cannot apply for citizenship immediately after obtaining the status of legal resident in Malta.
• Applicants are only allowed to apply for citizenship after having legal resident status for a period of three years, with the exception of a higher investment, where they can apply after one year.
• Applicants are required to undergo a rigorous due diligence exercise before being eligible to apply for Maltese citizenship. This is a new step that is being introduced to give the Agency enough time to conduct a thorough investigation based on a set of criteria. These include controls on the source of wealth and source of funds, studies on risks related to money laundering and controls on security-related matters.
• Findings on irregularities can be communicated to appropriate networks, such as Egmont Group and security services for EU-wide cooperation, in order to combat money laundering and all security-related risks.
• The Agency will carry out an appropriate risk assessment exercise related to each application.
• The Agency will ensure that the applicant’s source of funds is legitimate. It will take due care to ensure that there is no money laundering, and that there is no terrorist financing. This is always in accordance with the guidelines issued by the competent authorities.
• The new regulations have eliminated the time limit during which the Agency must carry out due diligence.
• This due diligence is to be carried out on all adult family members in the application.
• The number of successful applicants is being limited to 1,500 in total, with no more than 400 per year.

Agents are now governed by a dedicated subsidiary legislation. Only a limited set of professionals can become licensed agents: lawyers, auditors, public accountants, and licensed financial advisors. This ensures that licensees are well acquainted with money laundering, financial legalisms and anti-terrorist financing directives. Agents must present a certificate of clean criminal conduct. The agent shall be subject to due diligence by the Agency, both on application and annually thereafter. If an agent is no longer fit after the set period, the licence will not be automatically renewed.

The Agency is banning the aggressive advertising and promotion of the regulations leading to citizenship. Any such activity may lead to the suspension or revocation of the agent’s licence. Agents are obliged that if during the first five years of their clients becoming Maltese citizens they become aware of any breach of regulations, fraud or misleading or inaccurate information provided to the Agency, the agent shall immediately inform the Agency. The new regulations give the Agency more powers to suspend or revoke licences if agents are found to be in breach of their regulations or obligations.

The names of all individuals who obtain Maltese citizenship will continue to be published to ensure transparency. The Agency will be further strengthened by a new obligation to carry out continuous monitoring of applicants for the first five years after acquiring citizenship.

The clause that allowed the minister responsible for citizenship to grant citizenship to individuals who did not meet the basic legal criteria, will be removed. Although this discretion was never used during the IIP’s existence, it has been the cause of much criticism, and its removal is therefore a measure for better governance and in favour of transparency. The independent regulator will continue to scrutinise all the Agency’s work and processes and ensure appropriate oversight while the application process will have a full audit trail which will be scrutinised by the independent regulator.

A few weeks ago, the European Commission took a stand against the previous regulations. Nevertheless, Government reiterates that the awarding of citizenship is subject to each and every individual Member State, deciding for itself to who it shall award its citizenship and to who it shall not. There are more than 600,000 individuals who become European citizens every year against very minimal scrutiny. As can be seen from Malta’s recent unprecedented commitment to reforming laws and continuing to uphold European values, Malta is implementing regulations that go beyond what many other European Member States do to scrutinise applicants for citizenship.

The time Government has to formally respond to the European Commission is of 8 weeks. This reply in the form of a formal letter of notice will be submitted in the near future. As has already been reiterated, it is the government’s intention to use all possible legal measures to defend the national interest and sovereignty.