EP Report Proposes Radical New RCBI Rules: EU to Take 50% of Program Proceeds, Ban Lobbying, Marketing

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A new draft report from the European Parliament’s Committee on Civil Liberties, Justice, and Home Affairs includes a number of sweeping proposals for how the European Commission should deal with citizenship and residence by investment programs, which the report refers to as “objectionable from an ethical and legal point of view.”

The proposal’s author is MEP Sophia in ‘t Veld, a Dutch career politician.

Below is a selection of some of the more salient proposals included in the 16-page report, which you can read in full here:

Notable proposals from the Draft Report

A prohibition on lobbying the EU on RCBI-policy and on intermediaries’ assisting governments to implement RBI programs:

[…] a ban on public affairs lobbying or consulting is required for intermediaries and for affiliated industry representation organisations. Furthermore, intermediaries should not be allowed themselves to implement RBI schemes for Member State authorities. Intermediaries should only be allowed to act as intermediaries in individual applications and only when being approached by individual applicants.

Such a ban would imply that organizations like the IMC would be barred from advocating for the industry in Brussels. It would also prohibit government advisory firms from helping national governments implement RBI programs, a common industry practice. In a letter addressed to in ‘t Veld, Bruno L’ecuyer, CEO of the Investment Migration Council, writes that “this is a startling and seriously frightening proposition for the democratic functioning of the parliament [that] practically intends to legally forbid the activities of the IMC (and other associations on the Transparency Register), representing the legitimate interests of its members before Union and Member State institutions.”

L’ecuyer reminds the Committee that “interest representation is part of the decision-making and legislative process in the European Union,” and that the proposal, therefore, is “in clear violation of Art 10 and 11 of the Treaty of the European Union and the Treaty’s principle of participative democracy.”

Read the IMC’s complete letter here:

An EU-level license for intermediaries, subject to renewal every two years:

Where intermediaries are involved in applications, Member States should only be allowed to process such applications when prepared by Union-licensed intermediaries. Applications for licensing should be made to the Commission[…]

A ban on marketing RBI programs:

A Union-wide ban on marketing practices for RBI schemes. That should include prohibiting intermediaries processing applications under RBI schemes from using the Union flag on any materials, website or documents.

Undercover sting operations orchestrated by the EU against service providers:

A monitoring, investigations and sanctions framework to ensure that intermediaries comply with the regulation. The Commission, Union agencies and Member State authorities should be able to conduct undercover investigations, posing as potential applicants. Sanctions should include fines of up to 25 % of revenue and should, where infringements are established twice, lead to the revocation of the Union license to operate.

Checking with all the other member states before approving an applicant:

A system for prior notification to and consultation with all other Member States prior to granting residence under an RBI scheme should be set up. If a Member State does not object within 14 days, that will mean they have no objection to the granting of residence. That will allow Member States to detect double or subsequent applications and will allow Member States to conduct checks in national databases that might not be available at Union level.

Mandatory house-calls to monitor for physical presence

Member States should be required to effectively check physical residence on their territory and to keep a record of it, which the Commission and Union agencies can consult. That should include at least biannual in-person reporting appointments and onsite visits to the domicile of the individuals concerned.

Rules on permitted investment types; 75% of investment must go to “green and digital growth”:

Rules on the types of investments required under RBI schemes should be introduced. 75 % of the required investment should consist of productive investments in the real economy, in line with the priority areas of green and digital growth under the Recovery and Resilience Facility. Investment in real estate, investment or trust funds or in government bonds or payments directly into the Member State budget should not represent more than 25 % of the invested amount. Furthermore, any payments directly into the Member State budget should not be eligible as revenue for the purposes of the Stability and Growth Pact.

Member states would be forced to pay at least 50% of RCBI-income to the EU to compensate for the “negative consequences” such programs have on other member states:

As all Member States and the Union institutions are confronted with the risks and costs of the CBI and RBI schemes operated by some Member States, a common mechanism to offset the negative consequences of CBI and RBI schemes is justified. Moreover, the value of selling Member State citizenship or visas is inherently linked to the Union rights and freedoms that come with it. By establishing a CBI and RBI adjustment mechanism, the negative consequences borne by all Member States are compensated through that contribution to the Union budget. It is a matter of solidarity between the Member States having CBI and RBI schemes, the other Member States and the Union institutions. In order for that mechanism to be effective, the levy payable to the Union should be set at a minimum of 50 % of the investment made.

Preventing countries outside the EU from operating CBI programs by making visa-free travel and (where applicable) EU accession contingent on not operating them:

Third-country CBI schemes should be included in Regulation (EU) 2018/1806 as a specific element to take into account when deciding on whether to include a particular third country in the annexes to that Regulation, i.e. as a factor to decide on the third countries whose nationals are exempt from visa requirements. That should be embedded in the visa suspension mechanism set out in Article 8 of that Regulation and in the planned monitoring. […] For candidate countries, the complete phase-out of CBI schemes and the strict regulation of RBI schemes should be a prominent part of the accession criteria.