Latvia’s programme for obtaining temporary residence permits in exchange for investments in companies’ share capital has once again found itself at the centre of a major scandal. The Financial Intelligence Unit has identified more than 20 businesses registered in the country that, in its assessment, were used to arrange fictitious investments for the purpose of securing residence permits for foreign nationals.
According to the Financial Intelligence Unit, around 200 foreign nationals invested more than €10 million in the share capital of these companies. However, these “investments” yielded no real economic benefit for Latvian businesses: the money typically did not remain within the companies or go towards developing their operations, serving merely as a formal basis for obtaining residence permits.
The scheme worked as follows: foreign nationals would contribute funds to the share capital of specially created or existing Latvian firms, which formally satisfied the requirements of the golden visa programme. Once a residence permit had been granted, the money would often be withdrawn or returned, while the companies continued to exist on paper only.
The Financial Intelligence Unit has emphasised the scale of the problem it has uncovered and regards these transactions as suspicious from the perspective of money laundering and circumvention of immigration law.
This is not the first controversy to surround Latvia’s investor residence permit programme. Previously, the programme had already drawn criticism for inadequate oversight, money laundering risks, and the possibility of gaining access to the Schengen Area through purely formal investments.
The Financial Intelligence Unit is currently continuing its analysis of the gathered materials. It is possible that the investigation will result in concrete measures against the companies and individuals involved, as well as potential proposals to tighten the programme’s rules.
Latvia’s residence-by-investment programme continues to operate, but recurring scandals of this kind are increasingly calling its effectiveness and transparency into question.