On 30^th June 2020, the Maltese Parliamentary Secretary for Citizenship and Communities Hon. Alex Muscat MP, presented bill no. 138. The scope of this bill was to “provide a clear legal basis for the granting of citizenship by naturalisation through exceptional services and to extend the powers of the Regulator to investigate complaints submitted relative to the refusal of applications.”

Eventually passed as Act No. XXXVIII of 2020 which further regulates Chapter 188, i.e. the Maltese Citizenship Act – some of the changes related to the process of becoming a citizen of Malta through the Malta citizenship by investment program, are being reviewed below:

Article 2 of this Act, implies that the process of acquiring citizenship of Malta by making a significant investment in Malta, formerly referred to as the “Malta Individual Investor Programme” or MIIP, seems to now receive the more generic reference of ‘process for the granting of citizenship by naturalisation’. This change seems to have been put in place to support the government’s efforts in re-presenting the Malta citizenship by investment program established in 2014, as an optional path towards naturalisation which only becomes available, if the pre-requisite of holding a minimum of a 12-month residence status is satisfied. Whilst this identical requirement is also present in the MIIP, the proverbial spotlight is being shifted from the citizenship aspect, onto the residence pre-requisite.

Article 3 allows the inclusion of investing in Malta, to be regarded as an exceptional service. Indeed, the wording used in this article seems to be taken out of another separate, but related, subsidiary legislation – the grant of citizenship for exceptional services – 188.04. The wording used in this subsidiary legislation 188.04, explains exceptional services as contributions by scientists, researchers, athletes, sports people, artists, and cultural performers. The Act now also includes the contributions of investors and entrepreneurs as exceptional contributions. This makes the idea of a Malta Start-up Visa Program, proposed by CIVIQUO back in September 2019, a viable possibility.

In article 4 of this Act, there is a significant change in direction in respect to ‘Approved Agents’. In subsidiary legislation 188.03 – the MIIP regulations – an ‘Approved Agent’ means, audit firms, law firms, financial advisory firms, or any other person or body, which would have been approved to be as an intermediary firm by the Agency for the Malta citizenship by investment program. However, with the new changes, it appears that anyone without the required approval and who for gain, advertises, publishes, or publicly disseminates any information relating to the granting of Maltese citizenship by investment, shall be guilty of an offence and potentially liable for a fine of up to EUR 20,000. With such a condition being imposed, it will be interesting to see the requirements of the process to receive such authorisation, as this may act as a deterrent to a number of practitioners and firms who promoted the MIIP, to refrain from doing so, because they do not have the required authorisation.

Another interesting article in this Act, is found in article 5. This article addresses further possible provisions and regulations that may come into force to supplement the Malta Citizenship Act. One of the most interesting of these, is the possibility of a provision which publishes a list of individuals who may have been deprived of Maltese citizenship. Whilst together with publishing the names of individuals whose application has been approved, contributes to Malta’s transparent approach in this regard, this may have further ramifications in the context of AML/CFT laws.

Firstly, the rejection of applications has been strongly linked to the thoroughness of the state-of-the-art due diligence process – which is also unequivocally, an AML/CFT exercise. Secondly, the MIIPA publicly announced on a number of occasions that it forwards details of all applicants to Malta’s Financial Intelligence and Analysis Unit (FIAU); this is even confirmed through the IIP’s official website.

In the context of article 16(1) of the Maltese prevention of money laundering and funding of terrorism  regulations (PMLFTR):

• disclosing names of individuals who were deprived Maltese citizenship, due to a failed due diligence process which includes AML/CFT checks, to unrelated third parties – coupled with
• the fact that a Supervisory Authority is making it publicly known that applicant information is shared with the FIAU – who in turn, presumably, would have undertaken, or would have to undertake an analysis or investigation;

… would technically constitute a ‘tipping off’ offence.

The Act then continues to list the changes made to the Malta Citizenship Act, which are more specifically related to the appointment of a Regulator, and a monitoring committee which are beyond the scope of this article. In separate press releases, Hon. Muscat has also communicated some of the further changes to be expected in the Malta citizenship by investment 2020’s review and Malta citizenship cost, including:

• A capping of 1,500 applications overall, and further capping of 400 presumably approved, applications per annum;
• A contribution of EUR 750,000 if opting for the pre-requisite of a 12-month residence status or EUR 600,000 if opting for a 36-month residence status;
• The cessation of the need to invest EUR 150,000 in an instrument listed on the Malta stock exchange;
• A qualifying property, which must be leased for a minimum rental value of EUR 18,000 per annum or purchased, at a minimum purchase value of EUR 700,000; and
• A mandatory donation to a registered charity organisation of EUR 10,000;

It is therefore clear, that work on the Malta Citizenship Act is being done to pave the way for the revision of subsidiary legislation 188.03, which ultimately will need to be amended or superseded. One must also consider that the recent legal action which the European Commission has taken against Malta’s and Cyprus’s CIPs, will inevitably influence the changes being implemented in Malta’s citizenship by investment program. This incident should be quite familiar, as it is very similar to the 2014 negotiations between the European Commission and Maltese authorities, which merely resulted in a joint press release.