Malta launches new laws on Acquisition of Maltese Citizenship by Naturalisation for Exceptional Services 1. A New Residence Regime On 20 November, 2020, the Granting of Citizenship for Exceptional Services Regulations, 2020[1] (the “Regulations”) came into force. Aimed principally at regulating residence that may lead to citizenship, the Regulations are consistent with Malta’s drive to attract foreign direct investment and promote its position as a worthy jurisdiction for investment. The Government has emphasised that the Regulations neither constitute a continuation of the MIIP[2] nor an MIIP 2.0, but a new residence regime in its own right that may lead to eventual citizenship. 2. Community Malta Agency: The Powers of the Regulating Agency Indeed, a new governmental agency was established by the name of ‘Aġenzija Komunità Malta’ or ‘Community Malta Agency’ (“CMA”) tasked with the administration of all matters relating to the acquisition of Maltese citizenship. Mindful of the Government’s commitment to operate with utmost consideration for Malta’s international obligations and to preserve its reputation as a worthy, transparent and reputable financial centre and jurisdiction for international business, the CMA has been endowed with considerable powers. It is authorised to disclose information to the Commissioner for Revenue, the Financial Intelligence Analysis Unit, the Malta Financial Services Authority and the Commissioner of Police as well as international enforcement or regulatory authorities and police agencies. Just as important are its powers to carry out extensive due diligence and background screening of applicants for naturalisation and to demand from them full disclosure of assets and source of wealth and funds. Other powers include the continuous monitoring of persons acquiring citizenship during the first 5 years from acquisition. 3. Agents Not everyone is entitled to act as Agent assisting applicants with the process of naturalisation. In fact, under this new regime, only a limited category of warranted professionals may act as Agents, being the ones (such as, lawyers) who typically possess the knowledge of anti-money laundering and counter-terrorist financing prevention legislation and the necessary field experience. Agents are subject to secondary legislation specific to them and must submit to induction training and observe a published and legally-binding Code of Conduct. Their obligations are onerous. They are under a legal obligation to introduce to the CMA only persons worthy of being naturalised in terms of law – on pain of licence withdrawal and other penalties. Also, if within 5 years from the grant of citizenship, Agents become aware of a material breach of the Regulations or other applicable laws or fraud on the part of the erstwhile applicant or of any false, misleading or materially inaccurate information provided by the applicant to the CMA or the omission of information material to it (in all cases with reference to information provided or bound to be provided during the application process), the Agents are obliged to report these circumstances to the CMA. Any of these defaults may lead to the revocation of citizenship without refund. We are duly authorised to act as a licensed agent in terms of the Agents (Licences) Regulations, 2020 (L.N. 435 of 2020) and bound by the “Licence Agreement and Code of Conduct and Ethics for Agents” entered into with Community Malta Agency. Our official licence number is AKM-EQUI-21. 4. The Main Procedural Steps Simply put, the application process comprises 4 main stages: applying for pre-clearance; applying for residence status (and issuance of an eResidence card); applying for the Eligibility Assessment (see further below); applying for citizenship, once the applicant passes the Eligibility Assessment and completes the 36 or 12 month residence requirement (depending on choice) as well as satisfies the personal, commercial or financial ties that an applicant would have committed to in the residency proposal letter. In practice, applicants will be in a position to formally apply for Maltese citizenship only: after having maintained the status of legal resident of Malta for 36 months and committed to making an exceptional direct investment of €600,000 for the main applicant and €50,000 for each dependant or (depending on choice, but by way of exception) 12 months against investment of a higher sum of €750,000 for the main applicant and €50,000 for each dependant); and after having applied for, and been deemed to satisfy, an Eligibility Assessment which may be applied for immediately after applying for eResidence, so that the assessment process runs concurrently with the residence status period of 36 or 12 months. 5. The Main Features and Requirements (i) Due Diligence One of the hallmarks of the new legal regime surrounding naturalisation for exceptional services by direct investment – and on which the Government of Malta and the CMA lay great emphasis – is the heightened level of due diligence that will be applied by the CMA. During the Eligibility Assessment phase, the CMA will perform thorough due diligence and background checks on the main applicant and his dependants (as well as all known close or business associates). This will extend to, and also require, full disclosure of assets, source of wealth and source of funds, money laundering and terrorist financing checks and assessments of reputational and other risks associated with the applicants (and their associates) as well as other security risk concerns. The CMA will carry out a risk assessment in respect of each other applicant. (ii) Applicants Who may apply together with the main applicant? the spouse or long-term partner (including one in a civil union) of the main applicant; a child of the main applicant who has not yet attained the age of 18; a child of the spouse or partner of the main applicant who has not yet attained the age of 18; a child of the main applicant who is over the age of 18 but has not yet attained the age of 29, who is not married and who is wholly maintained or largely supported by the main applicant; a child of the spouse or partner of the main applicant who is over the age of 18 but has not yet attained the age of 29, who is not married and who is wholly maintained or largely supported by the said spouse or partner; a parent or grandparent of the main applicant who is 55 years of age or over and who is wholly maintained or largely supported by the main applicant; a parent or grandparent of the spouse or partner of the main applicant who is 55 years of age or over and who is wholly maintained or largely supported by the said spouse or partner. (iii) The Residence Application The main applicant and each of his adult dependants (including spouse or partner) would have to apply for residence status in Malta and maintain this for at least 36 or (by way of exception) 12 months, depending on the sum chosen for the direct investment (as explained above and further below). The residence application fee amounts to €5,000 for the main applicant and €1,000 for each dependant (and a nominal €27.50c for each residence card issued). The main applicant will also have to pay a non-refundable payment of €10,000 which is deductible from the exceptional direct investment made in satisfaction of the requirements of this regime. Although there does not seem to be a requirement that the main applicant and all adult dependants must apply for residence status simultaneously, the applicable residence status period does not commence to run until the last adult dependant has applied. (iv) The Eligibility Assessment The application process involves a rigorous and extensive due diligence “Eligibility Assessment” carried out by the CMA. Only when cleared may a main applicant be allowed to formally submit a citizenship application – and again only insofar as the 12 or 36 month Malta residence status requirement has been satisfied (depending on the sum of the direct investment undertaken to be made). At the Eligibility Assessment stage, due diligence fees amounting to €15,000 must be paid in relation to the main applicant (and any benefactor) and €10,000 for each dependant, as well as an administrative fee of €1,000 per applicant. Once applicants select the 36 month or (by way of exception) the 12 month option, they will not be permitted to change it, and the corresponding exceptional direct investment must then be made as originally chosen. Furthermore, apart from the rigorous assessment process mentioned above, a main applicant would also be bound to fulfil the following requirements after receiving the CMA’s Letter of Approval in Principle following submission of the formal citizenship application: purchase an immovable residential property having a minimum value of €700,000 to be acquired after the Letter of Approval in Principle is issued by the CMA and retained for a minimum period of 5 years from the date of the Certificate of Citizenship; alternatively, in lieu of a purchase, rent an immovable residential property of a rental value of at least €16,000 per annum, which lease must be retained for a minimum period of 5 years from the date of the Certificate of Citizenship; pay a mandatory contribution of at least €10,000 to a Maltese registered and regulated philanthropic, cultural, sport, scientific, animal welfare or artistic NGO enrolled with the Commissioner for Voluntary Organisations in Malta; (aa) make an exceptional direct investment of €600,000 in the case of the main applicant (and €50,000 in respect of each dependant) where citizenship is applied for after a residence period of 36 months; or (bb) alternatively, make an exceptional direct investment of €750,000 in the case of the main applicant (and €50,000 in respect of each dependant) where citizenship is applied for after a residence period of 12 months (and in either case, deducting from either sum the €10,000 already paid in advance to the CMA at the time of the application for residence referred to above); and pay an administrative fee of €5,000 for the main applicant and €1,000 per dependant at citizenship application stage. (v) Maximum Number of Admissions The number of available positions is purposely very small, being limited to an annual cap of 400 successful main applicants and a total maximum number of main applicants capped at 1,500. (vi) Publication of Names The Minister responsible for citizenship is bound by law to publish every year in the Government Gazette the names of all persons granted Maltese citizenship by registration or naturalisation within the previous 12 calendar months, including main applicants (and their dependants) acquiring citizenship for exceptional services under the Regulations. Similarly, the names of persons deprived of Maltese citizenship must be published by means of a notice in the Gazette as soon as practicable. We will be pleased to answer any queries you might have in relation to what has been described above. [1] L.N.437 of 2020 and S.L.188.06. [2] Malta Individual Investor Programme.