Chetcuti Cauchi on Misconceptions on IIP Rejections

Jean-Ph. Chetcuti on alternative reasons for failing the IIP due diligence

Dr. Jean-Philippe Chetcuti | Published on 01 Apr 2020 | Updated on 05 Apr 2020

Jean Philippe Chetcuti Cauchi Lawyers

As more high net worth individuals seriously consider the Maltese citizenship, misconceptions abound as to the level of ease or difficulty of successfully applying for citizenship under the Maltese Investment under the Individual Investor Programme.  While legal practitioners and the MIIPA insist that the IIP is a selective programme that rejects one in four applications, dissidents of what they call the 'Sale of Passports Scheme', claim that persons who fail the IIP's four tier due diligence process are criminals and money launderers.

Does rejection mean the applicant is 'of shady character'?

Contrary to common misperception, applicants who fail the due diligence of the MIIP are not necessarily shady characters.  

Persons with a criminal record or who are the subject of ongoing criminal proceedings are NOT EVEN ELIGIBLE TO APPLY and therefore are not able to undergo the due diligence process and fail it.

This is confirmed by a recent report published by the Maltese Citizenship Regulator, the ORiip, that conducted a study of Chetcuti Cauchi's submissions, looking specifically for any evidence that anyone with a criminal background was ever processed by the MIIPA.  The Regulator found NO such cases submitted, let alone processed by the Agency.

In any case, should an application be attempted, it would be stopped at the stage of the preliminary Immigration Police checks, before any residence or citizenship application is even entertained.  The agency responsible for processing applications for Maltese citizenship, the MIIPA, Malta Individual Investor Programme Agency, employs a four-tier due diligence which filters out those global citizens not deemed worthy.  We have written extensively on the Grounds for Rejection of Maltese Citizenship Applications.  In this article we address the alternative reasons that may result in rejection on the basis of ineligibility.

Alternative reasons for IIP rejection

The due diligence process adopted by the MIIPA includes eligibility criteria other than the obvious criminal grounds for rejection.  Therefore a rejection need not be indicative of a shady background but may mean that the applicant family has failed the due diligence test on other grounds:

Health Issues

Applicants or any dependents included in a family application who have a serious or contagious health condition may result in that person or the whole family failing the due diligence process and receiving a rejection of their application.  The MIIPA has the duty to ensure that persons making such a significant contribution of funds to the Maltese sovereign fund do not proceed to become a burden on the Maltese health care system, resulting in the financial burden outweighing the benefits to the Maltese economy.

Inability to present requisite documents

Investors may be unable to present certain documents that are absolute requirements.  Unless suitable alternatives or justification are provided, the applicant may fail the due diligence process of the Maltese Citizenship Programme.

Inability to prove sources of wealth that are no longer available

We have had cases where it has proved very time consuming to trace documents through alternative sources where the primary documents evidencing the legitimate source of wealth have been lost, not kept past statutory retention periods or have simply perished.  Where these efforts are not successful and a source of a material part of the wealth cannot be verified, this may result in the unfortunate rejection of an application even thought the source may indeed be legitimate.

Reputation

Many successful business families find themselves targeted by adverse media attention simply because of their significant wealth, given the unfortunate prejudice society puts on wealthy and successful businesses and families. It is unfortunate that, rather than encouraging the entrepreneurial values of hard work, sacrifice, perseverance and innovation, society seeks to find ways of tarnishing financial success by raising concerns about business ethics, favouritism and sometimes corruption.

At times, the negative press may be maliciously funded or promoted by business competitors or even political enemies.  Otherwise, as we might add, successful businesses may simply find themselves in political crossfire on some hot political issue and end up as scapegoats or collateral damage in campaigns to damage a political party or government, no matter how politically neutral a family may be.

Irrespective of the innocence of an applicant of any of the claims found in the press, significant bad press from well-known media sources may result in a rejection of an IIP application.

Political Factors

Being a politically exposed person (a PEP) is not a ground for ineligibility but requires close examination and may result in rejection if the political exposure is of a level that may negatively impact national security or public policy of Malta.  Likewise, is sufficient bad press surrounds an individual despite evidence of innocence of the facts alleged by the media, Malta may choose to safeguard its own reputation by denying the application.

4 Steps to success in applying for Maltese citizenship

 

The key to avoiding rejection is not only a comprehensive understanding of the grounds for ineligibility of the IIP. Examining the rationale of the programme is also crucial.

1.    Working with a specialist law firm would ensure a sense of security when disclosing confidential information, especially in the context of lawyer-client privilege. Minor indiscretions may have major implications on the outcome of the application, especially if not identified.

2.    Asking about the firm’s data security standards would ensure that your law firm of choice deploys bank-grade security standards. In turn, this would assert that client data is secure, especially when faced with data breaches.

3.    Opening up and giving your lawyers the full picture. Your Chetcuti Cauchi Advocates partner would prefer to be in control of the outcome of an application. Having all the relevant facts is essential to a successful application.

4.    Asking for an enhanced assessment before applying. Where standard due diligence indicates any of the above issues, our lawyers who are able to study the facts presented, to undertake their own undertake their own enhanced due diligence research to ensure the completeness of that information, to discuss a strategy that maximises your chances of success and, ultimately, are honest enough to advise you when the chances of a positive outcome are slim.

Get in touch with Us

Are you interested in knowing more about the Malta Citizenship by investment Programme (MIIP)? Feel free to get in touch with our Citizenship & Residency Lawyer for a consultation.


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Key Contacts

Dr Jean-Philippe Chetcuti

Senior Partner, Tax & Immigration

+356 22056411

Dr Priscilla Mifsud Parker

Senior Partner - Corporate, Tax & Immigration

+356 22056422

Dr Antoine Saliba Haig

Legal Associate

+356 22056446