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The supreme court of the European Union has ruled that Malta’s policy of doling out “golden passports” to wealthy investors breaches EU law, in a victory for the European Commission, the bloc’s executive branch.

In a ruling handed down by the Luxembourg-based Court of Justice of the EU on Tuesday, 13 judges concluded that Malta’s scheme, under which the island nation sells passports to non-EU nationals who pledge to invest at least €700,000 in the local economy, “manifestly infringes” the principles of EU citizenship.

This “commercialization … is incompatible with the basic concept of [EU] citizenship as defined by the [bloc’s] treaties,” the judges noted. “It infringes the principle of sincere cooperation and jeopardizes the mutual trust between member states.”

The Commission took Malta to court in March 2023 on the basis that the island nation granted EU passports to individuals without ensuring a genuine connection to the country under the scheme. Tuesday’s ruling is the culmination of a yearslong campaign by the Commission against citizenship-by-investment schemes, which officials believe facilitate illicit finance.