Bulgaria’s citizenship by investment programhas been called out by the European Commission for posing significant security, money laundering, tax evasion and corruption risks.
Bulgaria introduced its investment immigration program in 2005 followed by multiple amendments aimed at making it easier for wealthy investors to qualify for citizenship.
It operates two programs:
- The first program offers citizenship by naturalization to investors with at least five years of permanent residence investing at least €500,000 in the country.
- The second program reduces the minimum residence requirement to just one year provided the applicant invests at least €1 million in Bulgaria.
Significant Loopholes
The European Commission has highlighted various loopholes in the rules of the program.
Although open only to Bulgarian permanent residents, the law does not require the investor to be physically present in the country.
The Commission noted that this meant the program offered direct citizenship even to those with no past record of living in Bulgaria.
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While not all countries mandate physical presence for investment immigrants, there are general requirements for the applicant to prove links or connections in the form of establishing a residence or minimum language requirements.
The Bulgarian program is completely devoid of such requirements, which makes it susceptible to misuse by wealthy individuals seeking a quick route to a second passport.
Further, in another significant flaw, the program seems to have no real checks of the applicant’s criminal background. The Commission found no details of checks done on successful applicants.
Quality of due diligence has always been a contentious point, with Bulgaria having a particularly poor record.
In the past, Bulgaria has revoked the citizenship to an investment immigrant after a 20-year-old fraud conviction came to light.
The country faced embarrassment after Interpol blacklisted 114 holders of the Bulgarian passport.
In October 2018, the head of a key agency entrusted with issuing documentary proof of Bulgarian origin to applicants was convicted of corruption.
Bulgarian Government Reaction
In response to the scathing criticism, Bulgarian authorities have indicated their intention to terminate the program.
Official data indicates only 50 applicants have qualified for citizenship under the two programs between 2013 and 2019.
However, European Commission data indicates that the program fetched €160 million from 363 permanent residents between 2012 and 2017.
Bulgaria’s bid to join the Schengen region is being viewed as the probable reason behind the government’s decision to terminate the program.
The two other nations targeted in the Commission’s report, Malta and Cyprus, are already full EU members.
Since the report was released, both have reaffirmed their commitment to running their programs in a secure and transparent manner.