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Malta "Seriously Considering" Revoking Investor's Citizenship Following Money Laundering Conviction · IMI Podcasts

• 0:00
  SPEAKER_00: This episode first appeared as an article titled Malta Seriously Considering Revoking Investors' Citizenship Following Money Laundering Conviction, and authored by Ahmad Abbas on IMIDaily.com.
• 0:12
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• 0:28
  SPEAKER_00: Joseph Mizzy, CEO of the Community Malta Agency, which governs the country's citizenship by investment program, the MEIN policy, has told the Times of Malta his agency is seriously considering whether to recommend revoking the passport of one Semen Kukhksov, the 24-year-old son of Russian businessman Vladimir Anatolievich Khukhov, who acquired citizenship through Malta's citizenship by investment program.
• 0:54
  SPEAKER_00: A UK court in February convicted Semen Kuxov to five years and seven months of prison after he admitted to laundering over 14 million euros in cash.
• 1:03
  SPEAKER_00: Both Father Vladimir and son Semen obtained Maltese citizenship in 2022, just weeks before the Mediterranean Island Nation barred Russian nationals from participating in the MEIN policy.
• 1:14
  SPEAKER_00: Under Article 13 of Malta's citizenship law, the minister may revoke the citizenships of those who acquired it under the MEIN policy, or its predecessor, the MIIP, if they have been sentenced to prison sentences of 12 months or more within seven years of acquiring citizenship.
• 1:32
  SPEAKER_00: But a jail sentence, or even a conviction, is not necessary for Malta to deprive a naturalized individual of Maltese nationality.
• 1:40
  SPEAKER_00: Earlier this year, authorities moved to revoke the citizenship of an Israeli national, alleged to have developed computer spyware after the U.S.
• 1:47
  SPEAKER_00: Treasury added him to its specially designated national sanctions list.
• 1:52
  SPEAKER_00: Countries that offer citizenship by investment, keen to prevent undesirables from gaining citizenship and thereby imperiling these programs' reputations and integrity typically go to great lengths to vet applicants, including by subjecting them to multiple layers of independent due diligence.
• 2:08
  SPEAKER_00: As far as this newspaper has been able to ascertain, Kuxov had no criminal record prior to 2024.
• 2:14
  SPEAKER_00: Nonetheless, unsavory characters sometimes obtain alternative citizenship in the hope of shielding themselves from the consequences of illicit behavior.
• 2:22
  SPEAKER_00: Most CBI jurisdictions, however, reserve the right later to strip the offending individuals of citizenship under certain circumstances, such as if the individual is later convicted of serious criminal offenses, or who obtains the citizenship by fraudulent means, such as by concealing material adverse information.
• 2:40
  SPEAKER_00: Cyprus, for example, has rescinded the citizenships of hundreds of individuals who improperly obtained it through that country's erstwhile CIP.
• 2:49
  SPEAKER_00: In 2018, St.
• 2:51
  SPEAKER_00: Lucia revoked the citizenships of 18 CBI investors who had brought the country into disrepute.
• 2:58
  SPEAKER_00: James Muscat, a partner at Malta-based law firm Muscat as a party and associates, highlighted Malta's robust due diligence process and explained that the government has implemented safeguards in rare cases where serious issues arise when citizenship has already been granted.
• 3:18
  SPEAKER_00: In Malta's case, explains Muscat as a party, these safeguards allow the government to revoke a person's citizenship if they are, quote, found to, in relation to the application for naturalization, have committed fraud, false representation, or the concealment of any material fact, end quote.
• 3:36
  SPEAKER_00: In a separate development in Malta, the country's Financial Intelligence Analysis Unit has fined a local real estate agent 48,000 euros for failing to properly verify the source of wealth of a citizenship investor who purchased a 2 million euro property, the penalty is not yet final, as the agent can still file an appeal.
• 3:56
  SPEAKER_00: The FIAU said it had reviewed a sample of files and found that in 35% of cases, several buyers carried a high risk of money laundering due to either the high value of the acquisitions or because the buyer had bought the property outright without a mortgage.
• 4:12
  SPEAKER_00: The FIAU found the real estate company in question had failed to carry out enhanced due diligence on such property acquisitions.
• 4:20
  SPEAKER_00: In its statement on the matter, the FIAU said it was not sufficient for the real estate agency to, quote, simply collect the source of wealth information, end quote, but that it also needed to verify the information against documentation, particularly because of the elevated risk of the cases.
• 4:38
  SPEAKER_00: The estate agency, said the FIAU, could have checked the source of wealth by, quote, performing open source or internet checks on the purchaser to verify the information on the purchaser's wealth, occupation, and business activities, which could have served to further corroborate the declared source of wealth, end quote.
• 4:58
  SPEAKER_00: Muscat Azapardi points out that real estate agents have an obligation to verify the source of wealth on each transaction, whether the buyer is a citizenship investor or not.
• 5:08
  SPEAKER_00: The FIAU, he says, routinely audits subject persons to such controls and can issue fines for any administrative failures.
• 5:16
  SPEAKER_00: One example cited by the FIAU involved the purchase of two properties by a client who had acquired Maltese nationality through the country's citizenship scheme.
• 5:26
  SPEAKER_00: The properties, purchased in one of the island's special designated areas for real estate, had a combined value of over 2 million euros, with both purchases occurring in less than a year.
• 5:38
  SPEAKER_00: While the realtor collected detailed information on the purchaser's source of wealth, including details on a business owned within a non-EEA jurisdiction, and a copy of the financial statements of a local company the purchaser owned, the FIAU, deemed this insufficient.
• 5:53
  SPEAKER_00: A closer look revealed that financial statements showed the client's company was not profitable and suffered year-on-year losses, making it unclear how the client could inject around€200,000 as a shareholder's loan and purchase property worth 2 million euros.
• 6:08
  SPEAKER_00: Musket as a party notes that, in these cases, the clients are unaffected.
• 6:13
  SPEAKER_00: Musket says that this is, quote, an administrative breach by the real estate broker and does not impact the property transfer, the buyer, or the seller, end quote.
• 6:25
  SPEAKER_00: Thanks for joining us today on IMI Podcasts.
• 6:28
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