Malta has rebuffed Brussels warnings and has argued that the issuing of citizenship should remain a "national competence".
ADVERTISEMENTThe European Commission has stepped up its calls on Malta to end its controversial "golden passports" scheme.
The Commission urged all EU member states to "abolish" such programmes on Wednesday, threatening to go to the EU's Court of Justice.
"The Commission considers that the granting of EU citizenship in return for pre-determined payments or investments, without any genuine link to the Member State concerned, is in breach of EU law," a statement read.
"Investor citizenship schemes undermine the essence of EU citizenship and have implications for the Union as a whole."
Since 2014, wealthy foreign citizens have been able to acquire Maltese residency or citizenship in exchange for investing around €1 million in the country.
So-called "golden passport" schemes in Bulgaria, Malta, and Cyprus have been criticised by Brussels for links with corruption and money laundering.
Last month, the Maltese government announced it would be suspending "golden passports" for Russian and Belarusian nationals "until further notice" due to the war in Ukraine.
"This is a positive first step, but Malta continues to use this system for other nationalities and has not expressed its intention to end it," the EU Commission said on Wednesday.
Malta has insisted that the granting of citizenship should remain "a national competence" and states that only "deserving people" benefit from the scheme.
Prime Minister Robert Abela says that the scheme has raised hundreds of millions of euros and enabled Malta to support businesses during the COVID-19 pandemic.
Cyprus has abolished its "golden passport" system and stopped issuing residency permits in October 2021.
Last month, MPs in Bulgaria also backed a decision to end the controversial issuing of so-called "golden passports".
Malta now has two months to reply to the official notice sent by Brussels.