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Special Report
A GUIDE
TO GLOBAL
CITIZENSHIP
THE 2018
CBI INDEX
in association with
CORPORATE STATEMENT MAP
Austria
Bulgaria
Turkey
St Kitts
and Nevis
Antigua
and Barbuda
Malta Cyprus
Cambodia
Dominica
Jordan
St Lucia
Vanuatu
Grenada
2 AUGUST/SEPTEMBER 2018
CONTENTS
August/September 2018 pwmnet.com cbiindex.com
Published by:
SPECIAL REPORT
Financial Times Ltd,
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A GUIDE
Bridge, London
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TO GLOBAL
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CITIZENSHIP
Editor-in-Chief
Yuri Bender 6376
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THE 2018
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CBI INDEX
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04 INTRODUCTION 12 THE CRYPTOCURRENCY CHALLENGE Annual subscriptions:
£415 | €525 | $675
CBI schemes offer individuals freedom of movement Some jurisdictions have been quick to embrace Subscription Enquiries:
tel: +44(0)20 7873 4240,
while providing vital funds to what are often cryptocurrencies while others have been wary to do pwm@ft.com
cash-strapped nations, yet continue to draw so, yet all will have to deal with the phenomenon Change of Address
criticism Notification
13 DUE DILIGENCE
pwm@ft.com
06 THE CBI INDEX 2018 As more countries enter the citizenship market, due
© Financial Times 2018
Since last year, the citizenship by investment industry diligence will be a defining element of differentiation
PWM is a trademark of Financial
has seen significant changes, from programmes between their programmes Times. “Financial Times” and
“FT” are registered trademarks
lowering their minimum investment requirements, to
14 DUE DILIGENCE IN THE CARIBBEAN
and service marks of the
fostering accountability among stakeholders Financial Times Ltd. All rights
reserved. No part of this
The Caribbean CBI programmes are generally publication may be reproduced
07 A HISTORY OF CBI associated with far-reaching due diligence, explains
or used in any form of
advertising without prior
permission in writing from the
St Kitts and Nevis was the first country to launch a Heyrick Bond Gunning, CEO of S-RM editor. No responsibility for loss
CBI programme in 1984, while Jordan launched its occasioned to any person acting
scheme in 2018 16 METHODOLOGY or refraining from acting as a
result of material in this
publication can be accepted. On
The CBI Index is built around seven pillars, any specific matter, reference
08 DEMYSTIFYING CBI designed to satisfactorily measure global citizenship should be made to an
appropriate adviser. Registered
The relationship that is formed between the state and programme features and jurisdictional desirability Office: Number One Southwark
Bridge, London SE1 9HL, UK
the economic citizen lasts a lifetime, unlike the one
that is established with economic residents 20 KEY FINDINGS The Financial Times adheres to
a self-regulation regime under
the FT Editorial Code of
The CBI Index’s key findings present an evaluation of Practice: www.ft.com/editorial
09 RECOGNISING POSSIBILITIES each country both overall and within the parameters code
Similarities exist among citizenship by investment of the seven pillars
programmes, yet each has its own flaws and virtues
24 INFOGRAPHIC
10 REAL ESTATE An overview of the seven pillars that form the CBI
Insisting applicants purchase real estate is a common Index
feature of CBI schemes, but it can bring drawbacks as
well as benefits 26 PROGRAMME PROFILES
A closer look at the 13 citizenship by investment
11 FUTURE OF CBI programmes which make up the CBI Index
The first CBI schemes were launched in the 1980s, and
the industry has been in a state of constant evolution 34 COUNTRY SNAPSHOTS
ever since Key information about the 13 nations that make up
the CBI Index
Published in
youtube.com/ Professional Wealth @FT_PWM association with:
FTPWM Management Group
PWMNET.COM 3
International critics fail to
stem growing CBI industry
WRITTEN BY YURI BENDER the UK and Europe have become much
INTRODUCTION more aware of dual citizenship post-
Brexit,” confirms Micha-Rose Emmett,
CBI schemes offer wealthy CEO of CS Global Partners, specialising Freedom m of movement
individuals freedom of
movement while providing
in residency, citizenship, immigration
and foreign investment law. is beccoming a key factor
vital funds to what are often “Freedom of movement is becoming
a key factor at a time when immigration
as immigration policies
cash-strapped nations, yet
continue to draw criticism
policies are getting more restrictive are getting more
around the world,” says Shelby du
restrictive
T
Pasquier, head of the banking and
he concept of citizenship financial services practice at Geneva SHELBY DU PASQUIER LENZ & STAEHELIN
by investment (CBI) lawyers Lenz & Staehelin, one of
– allowing wealthy Switzerland’s leading experts in tax
individuals fast track and wealth management. “It is not that have been subjected to natural
to a second citizenship surprising there is so much interest from disasters such as tropical storms,
and passport in return for investment Russia and Asia.” and smaller European island nations
into real estate or a donation into CBI programmes, he believes, also which suffered in the financial crisis.
a government fund – is becoming offer an “alternative” back-up plan for “For these sponsoring countries, CBI
increasingly attractive as a gateway for nationals of jurisdictions threatened by programmes are a welcome source
non-EU citizens to access Europe. political turmoil or instability. “Many of revenues and a pole of attraction
Freedom of movement within of the people affected by these threats of high net worth individuals and
the EU, especially in the wake of the are looking for an additional citizenship entrepreneurs who may in turn
UK’s contentious Brexit referendum, as a precautionary measure in case the contribute to the development of
is now central to the attraction and situation should worsen in their country the country,” adds Mr du Pasquier.
Gateway to Europe:
marketability of the schemes. of origin,” says Mr du Pasquier. Malta’s Individual
“Given their success, these types of
The thorny European question But they have also become an Investor Programme is programmes are unlikely to be stopped
has been a key factor in boosting the important source of revenue and often particularly attractive or curtailed in the near future.”
as it offers EU
industry’s success, according to most a lifeline for the sponsoring countries, citizenship as part of Dominica, which has performed
commentators on the issue. “People in many of them Caribbean jurisdictions its package well in the CBI Index, is an excellent
example of how such a scheme can be
used to rebuild after the twin disasters
of Hurricane Maria and Tropical
Storm Erika devastated the island’s
infrastructure.
The country’s list of economic
challenges is not one for the faint-
hearted. The Post Disaster Needs
Assessment following Hurricane Maria
identified total damage valued at $930m
and losses of $380m. The sum of these
two measures was equivalent to more
than twice the GDP generated in 2016.
All images Getty unless specified
The housing sector suffered the greatest
damage, calculated at more than
$350m, with 44 per cent of buildings
experiencing either major structural
damage or being totally destroyed.
Many of the country’s “rehabilitation
projects” are funded with resources
4 AUGUST/SEPTEMBER 2018
INTRODUCTION SPECIAL REPORT
from the Citizenship by Investment
Programme. In fact, during 2017,
the entire capital budget of $222.9m
was financed with CBI funds. CBI
is directly funding housing and
hotel developments, plus tourism
and agriculture projects. Payouts Ms Edwards sees opportunities for Hong Kong and China of individual countries, alongside
to householders of $34m and a the possibility of not only broadening have provided many of advice from specialist international due
the applicants for CBI
government initiative to build 5,000 source markets, but also using openings programmes, though
diligence firms.
homes will likely be financed by CBI provided by second citizenships to interest from Latin There have been rumblings from
receipts. facilitate the expansion of business America, Africa and IMPACS that their recommendations are
the Middle East is
All funds received by the government opportunities. increasing not always followed, as some countries
of Dominica and the nature of their use Residents of oil rich countries in will prioritise economic development
are disclosed to parliament and subject particular are expected to subscribe for and recovery over security.
to audit. The names of all applicants more second citizenships. “Residents Regulators insist they follow the
approved under the CBI system of the Middle East are becoming recommendations to make sure only the
are also published in the Dominica more interested in these citizenship highest quality applicants are accepted.
Official Gazette, a government bulletin programmes in light of political Law firms suggest that additional due
available for a $50 annual subscription. instability at home,” confirms Natacha diligence, carried out by private experts
Onawelho-Loren, head of Legal, Trust like Exeger or Thomson Reuters, casts a
VOCAL CRITICS and Fiduciary at the Salamanca Group wider net over applicants to Caribbean
But despite this economically in Geneva. Global families will continue centres.
vital work, like other Caribbean to search for security, she believes, with Keeping out “untoward characters”
governments, which are increasingly political and economic stability across must always be a number one priority
co-operating under the regional many regions accelerating this trend. and challenge for promoters and
CARICOM umbrella to co-ordinate their She points to Malta and Cyprus regulators, believes Ms Emmett at CS
CBI initiatives, Dominica detects some having particularly attractive Global Partners.
international hostility to its programme. programmes, as they offer EU She is also expecting countries
“The main challenges to us are the citizenship as part of their package, with offering second citizenships to continue
continued misrepresentations of the property ownership demonstrating a broadening their reach. “A lot of new
CBI Programme,” says the country’s “durable link” to a host country through markets are opening up as people are
financial secretary Rosamund commitment to the local economy. getting to understand what CBI is about.
Edwards. These critics, she says, Broadly, due diligence processes There is more interest now from Latin
“do not realise the tangible benefits are improving, believes Ms Emmett at America, the Middle East and Africa. It’s
to our small countries in meeting CS Global Partners, with Caribbean not just about China anymore.”
our development objectives and in countries running perhaps the more One major concern is a “race to the
achieving international benchmarks robust programmes, because their bottom” among Caribbean countries
such as the sustainable development economies are more likely to depend on engaged in “wholesale discounting of
goals committed by all of our countries CBI income. application and donation or investment
at the UN.” There is however some controversy fees,” says Christopher Ashby,
Although CBI programmes are in the Caribbean, as well as in other chairman of Chanson D’argent Ltd, a
generally available to citizens across jurisdictions, about whether due Grenada-based property developer
the world, including Russia, the diligence is as strong as it could be. specialising in CBI projects.
Middle East and China, it is often There is an undoubted initiative from “Though in many cases, there
these jurisdictions that many clients CARICOM to curb organised crime is an obvious business rationale
come from. Representatives of some across the Caribbean region through its for increasing the throughput of
Caribbean jurisdictions report spending Implementation Agency for Crime and applications, the probability of the due
more than half of their time in Hong Security (IMPACS), which also provides diligence process being compromised
Kong and China, which they describe as recommendations on which applicants increases exponentially with this
“the most lucrative market” for CBI. to accept or reject for CBI programmes practice.”
PWMNET.COM 5
CORPORATE STATEMENT THE CBI INDEX
The CBI Index 2018
N
ow in its second year, the CBI removal of Comoros from its list of guidance materials, official circulars and
Index ranks and reviews citizenship by investment programmes, data channels, and direct communication
today’s active citizenship by following the programme’s termination. with governments and their formal affiliates,
investment programmes, However, green shoots have emerged from the CBI Index dispenses the latest industry
providing a practical and comprehensive Comoros’ demise, as two new nations, information. At the same time, it follows the
guide to persons wanting to compare the Jordan and Turkey, launched their own format of the inaugural 2017 edition,
world’s options for economic citizenship. citizenship by investment programmes. In measuring the value of each citizenship by
Since last year, the citizenship by so doing, these countries became the first investment country by its performance in
investment industry has seen significant Middle Eastern nations to fully develop an seven categories, or ‘pillars’, and thereby
changes, from programmes lowering their option for economic citizenship, setting a delivering continuity to its readers.
minimum investment requirements, to regional record and standing as a testament Ranging from ‘mandatory travel or
fostering accountability among to the industry’s growing popularity. residence’ to ‘due diligence’, the CBI Index
stakeholders. New challenges have also The CBI Index therefore now comprises pillars give readers the opportunity to
emerged, with cryptocurrency being a an expanded total of 13 countries: Antigua appraise programmes according to specific
major talking point. The CBI Index reflects and Barbuda, Austria, Bulgaria, Cambodia, criteria rather than merely as a whole.
these changes, and seeks to provide a Cyprus, Dominica, Grenada, Jordan, However, for those who want to quickly
starting point for further discussion of Malta, St Kitts and Nevis, St Lucia, Turkey, determine the year’s best and worst
these issues and the compelling questions and Vanuatu. citizenship by investment options, individual
they may raise. Armed with new material gathered from pillar scores are also aggregated to produce
The 2018 CBI Index has seen the countries’ legislation, application forms and a final, overall score.
A TIMELINE OF CITIZENSHIP BY INVESTMENT
S Ki ts nd evis Do in ca
1 8 9 3
1980’s 1990’s 2000’s
Austria
19 5
6 AUGUST/SEPTEMBER 2018
HISTORY OF CBI CORPORATE STATEMENT
A history of CBI
R
egulating citizenship is a lull ensued, until the Commonwealth of Visit pwmnet for an slowing down, particularly in Europe,
prerogative of the state, and Dominica established its own citizenship expanded version where Moldova passed relevant
of the CBI Index,
the implementation of by investment programme in 1993. including detailed legislation to make way for a
citizenship by investment is Cyprus followed in 2002, although the profiles of all 13 programme, and where Montenegro
therefore a consequence of states Cypriot programme as we know it today citizenship by appointed a government commission to
investment
adopting laws and creating the was designed more than a decade later. programmes oversee the creation of the Montenegro
structures necessary to support a Vanuatu has a history of launching, Special Investor Programme (MSIP),
citizenship by investment programme. terminating, and re-launching citizenship scheduled for October 2018.
With its 1984 Citizenship Act, St Kitts by investment programmes. Its most Nearby Georgia is also rumoured to
and Nevis became the first-ever state to recent Contribution Programme be considering citizenship by
allow persons to be registered as citizens became operational in 2017. 2013 was the investment. Article 7 of Georgia’s Law
after making a substantial investment. most popular year for citizenship by on Citizenship, for example, already
The move was a significant one, as the investment, with two Caribbean nations contains provisions to bestow honorary
Citizenship Act defined what it meant to and Cambodia instituting new citizenship to an alien who has made an
become a citizen of St Kitts and Nevis programmes. 2017 saw the birth of the exceptional contribution to Georgia and
following its independence from Britain Middle East’s first fully-fledged to mankind, or who has a profession and
in September 1983. Also in the 1980s, programme, set up by Turkey, and tailed qualification which is of interest to
Austria legalised granting nationality by shortly after by Jordan. Georgia, so long as bestowing
reason of a person’s actual or expected The citizenship by investment citizenship would be in the country’s
outstanding achievements. Thereafter a phenomenon is showing no sign of national interests.
Antigua and Malta Jordan
B lgaria Barbuda 2014 2018
0 9 03
2010’s BEYOND
Cyprus C m odia, ur ey,
2 02 Gr na a t uci a ua u
2013 2016 2017
PWMNET.COM 7
CORPORATE STATEMENT DEMYSTIFYING CBI
Demystifying CBI:
citizenship vs residence
other forms of investor immigration. lasts a lifetime. This distinguishes the
WHAT IS CITIZENSHIP?
At the heart of the citizenship by economic citizen from the ‘economic
The relationship that is formed between investment process is the promise that resident’. Economic residents are
the state and the economic citizen lasts a successful applicant will receive those who, having applied under a
a lifetime, unlike the one that is ‘citizenship’ – that is, membership of residence by investment programme,
established with economic residents the nation under whose laws the receive a set of temporary and fluid
application was lodged. With that rights, the most prominent of which is
membership comes an array of civil, the right to live and work in a country.
economic and political rights and Loss of economic residence remains a
A
lthough ‘citizenship by duties which, other than in extreme real possibility for those who fail to
investment’ is now a major circumstances, are permanent and abide by the conditions of their
talking point for irrevocable. These can range from the residence, which often include physical
governments, international right to work, to the obligation to presence, the retention or
organisations and the media, respect and defend the constitution. development of an investment, and
confusion persists as to the unique The relationship that is formed continued good behaviour.
nature of citizenship by investment between the state and the individual – Despite these significant
and the qualities that set it apart from the ‘economic citizen’ – is one that differences, citizenship and residence
by investment are often collapsed into
a single category: investor
Confusion persists immigration.
as to the unique The result can be misperception. In
nature of
citizenship by February 2018 for example, the
investment and the OECD likened citizenship by
qualities that set it investment to residence by investment
apart from other
forms of investor for its perceived susceptibility to abuse
immigration by wrongdoers seeking to conceal
their tax residence.
In so doing however, it overlooked
the fact that economic citizens do not
automatically become residents of
their country of citizenship, and that
most citizenship by investment
jurisdictions – particularly in the
Caribbean – do not issue documents
that indicate residence, let alone tax
residence. It also did not draw
distinctions between the robust due
diligence processes that characterise
the citizenship by investment industry
and that allow it to stand above
residence by investment.
The CBI Index sheds light on
citizenship by investment both as a
concept and as a process. Its goal is to
dispel unfounded fears, to ensure
assessments and critiques are based
on fact, and to empower the
prospective economic citizen through
knowledge and education.
8 AUGUST/SEPTEMBER 2018
RECOGNISING POSSIBILITIES CORPORATE STATEMENT
Recognising the
possibilities that lie ahead
SELECTING A SCHEME
Similarities exist among
citizenship by investment
programmes, yet each has
its own flaws and virtues
A
n alternative citizenship can
fundamentally affect a
person’s life, family, and
interests. The decision to
become a national of another country is,
therefore, in and of itself worth careful
consideration. This holds even truer for
prospective economic citizens, who,
unlike other citizens-to-be, have the
privilege – and burden – of choice.
There are 13 nations whose laws, and
whose internal systems, have been
sufficiently developed to sustain a
working citizenship by investment
programme.
By region, the Caribbean provides the
highest number of citizenship by
Jordan's CBI
investment jurisdictions in the world. apart from countries with residence by programme, which embraced citizenship by investment.
Each of its five citizenship by investment investment programmes. launched in 2018, Turkey’s experience was one of opening
programmes is spelled out in laws and Vanuatu stands alone in the blue has been met with a programme with high investment
widespread
regulations, and dedicated government vistas of Oceania. Uniquely, it recently popularity among thresholds, only to quickly announce it
bodies, normally identified as ‘units’, instituted both a citizenship by citizens of nearby would reduce its requirements in light of
process applications. Some can lay claim investment programme and an honorary countries low uptake. Jordan, on the other hand,
to decades of longevity and a high citizenship programme. The CBI Index has been met with widespread
likelihood of continued success. Others, examines the workings of the former, popularity, particularly among citizens of
in contrast, have only been in place for a particularly as it is unclear what the status nearby countries.
handful of years, and have yet to stand of ‘honorary citizen’ may truly entail. While similarities exist among
the test of time. Within Vanuatu, honorary citizens have citizenship by investment programmes,
Europe offers four citizenship by no voting privileges and cannot each has its own flaws and virtues – and
investment options. Its most participate in the political process, yet a regional approach alone will not, and
longstanding programme – that of they are issued with a passport. Abroad, should not, satisfy the prospective
Austria – is also its murkiest. Two islands, would nations that require renunciation citizen. Delving into the CBI Index, on
Cyprus and Malta, supply direct routes of other citizenships view honorary the other hand, will provide the close-up
to citizenship, while Bulgaria presents a citizenship as an exception to this rule? analysis necessary for an educated
slower avenue to citizenship, which has Another standalone nation is assessment of citizenship by investment
led some commentators to characterise Cambodia, this time presenting an across the globe, giving readers the
its programme as a hybrid between a option for Asian citizenship. Cambodia’s tools necessary to make the best
residence and citizenship scheme. programme is currently under intense citizenship decision for themselves,
Importantly however, Bulgaria does not government scrutiny. their household, and their business and
require physical presence – setting it The Middle East has only recently personal activities.
PWMNET.COM 9
CORPORATE STATEMENT REAL ESTATE
Investing in real
estate for citizenship
A surge in demand
REAL ESTATE for luxury
Insisting applicants purchase apartments in
Limassol has
real estate is a common boosted the
construction
feature of CBI schemes, but industry in Cyprus,
it can bring drawbacks as but also priced
locals out of the
well as benefits market
M
ost citizenship by
investment jurisdictions
incorporate a real estate
component into their
programmes. In some, like Cyprus,
investment in real estate is mandatory, while
in others, like the Caribbean island-nations,
it is an option that applicants can weigh
against monetary contributions, or, in some
cases, business investments or the purchase
of government bonds. Malta is unique in
giving applicants the possibility to either
purchase or rent a residential property. for homes, beginning with luxury sometimes even rent, real estate in coastal
From an applicant’s perspective, having to apartments in waterfront areas and trickling Limassol and other desirable cities around
provide evidence of a real estate transaction down to the heart of the island. A report by the country.
presents a programme shortcoming, as the PwC, based on information from the Applicants for economic citizenship in
applicant must inevitably attend to all the Department of Lands and Surveys, noted the Caribbean are not required to invest in
complex procedures associated with that sales of residential property worth real estate, yet, should they decide to, their
becoming a property owner or leaseholder. €1.5m or more rose by 69 per cent choice would be confined to government-
There is a silver lining to every cloud between 2016 and 2017, and by more than approved projects, usually limited to shares
however, as applicants who are required to 132 per cent between 2013 and 2017 of resorts and hotels, or units within those
buy or rent real estate are generally given (Cyprus relaunched its economic developments.
very few restrictions on location or property citizenship programme in 2014). On The Caribbean has no private residence
type. Generally, all that is required is a private average, property sales across all of Cyprus requirement, and only a minority of
residence. increased by 24 per cent between 2016 and programmes offer applicants a choice of
From a country’s perspective, the 2017. Of the 8,734 sales recorded in 2017, apartments, houses, or condominiums. The
decision to provide flexibility within the 27.5 per cent were made to non-Cypriots – consequence has been an unmistakable
framework of a fixed real estate requirement a near-33 per cent increase from the trend towards the contribution option, but,
presents both benefits and drawbacks. This previous year. when real estate investments are made,
dichotomy is exemplified by Cyprus. Growing demand for homes has inflated they have had an overwhelmingly positive
Under Cypriot law, successful applicants property prices and boosted construction, effect on local populations.
for citizenship by investment must generating certainty for proprietors and With each investment in a luxury resort
purchase a residence worth at least incentivising their spending. At the same come jobs – first in construction, and then
€500,000 ($585,000), which they must time however, Cypriot wages have failed to in upkeep and services – new options for
hold for the remainder of their lives. Most keep up, remaining stagnant for almost a tourists, and a raised international profile,
applicants also choose to make an decade. Those without the resources to both for the nation itself and for the region
additional three-year €1.5m investment in purchase property have thus fallen back on overall. And, as the investor and the local
residential real estate – Cyprus’ most rental properties, in turn increasing rent citizen look to two different markets for
affordable route to citizenship. prices. This has caused distress to the locals their real estate, the impact on local
The result has been a surge in demand who can no longer afford to buy, and purchasing power is far less direct.
10 AUGUST/SEPTEMBER 2018FUTURE OF CBI CORPORATE STATEMENT
Adaptability as a mark of
endurance and success
local property developers eager to get their the National Development Fund were
THE FUTURE OF CBI
projects underway by launching a second, reduced by 50 per cent.
The first CBI schemes were $200,000 real estate arm to its Citizenship St Kitts and Nevis took the opportunity
launched in the 1980s, and by Investment Programme. In May 2018, to establish a provisional route to citizenship:
the industry has been in a yielding to European pressure, Cyprus a Hurricane Relief Fund that, in the words of
state of constant evolution announced that it would cap its programme the prime minister, would enable “the
at 700 per year and apply enhanced due country and its people to recover more
ever since diligence on all applicants, extending the quickly and to ensure that the infrastructure
expected processing time to six months. and people’s homes are fit and habitable
C
itizenship by investment can By responding to direct calls for change where they have been damaged by this
trace its roots back more than from internal and external parties, citizenship season’s hurricanes”.
three decades, when St Kitts by investment programmes have ensured More recently, St Kitts and Nevis
and Nevis passed Section 3(5) their survival and retained their place in the unveiled a new, permanent citizenship
of its Citizenship Act, thereby enabling a modern immigration landscape. A different option in the form of the Sustainable
person to be registered as a citizen if kind of response, not involving outsider Growth Fund (SGF). The SGF marked a
“cabinet is satisfied that such person has appeals, has however also begun to shape significant maturation in the citizenship by
invested substantially in St Christopher and the citizenship by investment industry. investment market, as the scope of the SGF
Nevis”. Yet longevity has not produced Indeed, in late 2017 and 2018, citizenship by was closely aligned to the 17 Sustainable
stagnancy, and the industry has been in investment jurisdictions began to take steps Development Goals set by the United
constant evolution, with its momentum to modify their programmes in response to Nations to be achieved by 2030. The SGF,
renewed by investor demand, stakeholder their shifting environment, with directives for arguably today’s most popular option for
needs, and international oversight. amendment coming from the governments economic citizenship despite its youth,
Examples are copious and diverse. In themselves. stands as a primary case in point of how, by
2014, Malta introduced a one-year One illustration is the speed with which identifying global interests and taking active
residence requirement under its Individual certain Caribbean island-nations modified St Kitts and Nevis steps towards the pursuit of those interests,
Investor Programme to alleviate EU their existing programmes to overcome the launched its governments can create a strategy for
concerns that economic citizens lacked a impact of devastating climatic events in citizenship by citizenship by investment that enables their
investment scheme
genuine link to the state. That same year, September 2017. In Antigua and Barbuda, more than three programmes not merely to last, but to
Dominica made a showing of support for the minimum investment amounts under decades ago thrive.
Pic courtesy of St Kitts Tourism Authority
PWMNET.COM 11CORPORATE STATEMENT CRYPTOCURRENCIES
The cryptocurrency
challenge
transactions through advanced has voiced its intent to be at the
CRYPTOCURRENCIES
cryptography recorded on a blockchain “frontline” of blockchain technology,
Some jurisdictions have been quick to ledger. something it described as a “crucial
embrace cryptocurrencies while others How have citizenship by investment innovation”.
have been wary to do so, yet all will jurisdictions responded to the Just like countries considering
have to deal with applicants who have cryptocurrency revolution? cryptocurrency, countries adverse to
In October 2017, Vanuatu was widely mingling their economic citizenship
exposure to the phenomenon publicised as the first citizenship by programmes with digital currencies will
investment nation to accept bitcoin – the have to contend with the ‘bitcoin
C
itizenship by investment is world’s most recognised cryptocurrency. millionaire’ and ‘bitcoin billionaire’ whose
rapidly expanding and taking Shortly after the media storm however, source of funds is an investment in
different shapes across the Vanuatu’s Citizenship Office denied the bitcoin (or its equivalent).
globe. In devising new reports, stating that Vanuatu would only A survey released in May 2018
economic citizenship programmes, accept payments in US dollars as showed that, out of more than 600 high
governments must be mindful of the issues prescribed by its regulations. net worth respondents, 35 per cent had
and doubts that their programmes could In July 2018, Antigua and Barbuda’s already gained exposure to
inherently generate. But even countries Lower House of Parliament passed an cryptocurrency or intended to gain such
with tried-and-tested programmes must amendment to the Antigua and Barbuda exposure by the end of the year.
react and adapt to the challenges that Citizenship by Investment Act, enabling Countries will also need to contend with
come with the world’s rapidly shifting receipt of payments via cryptocurrency. programme agents who accept
socio-political, economic, and even Forewarnings of the move had generated cryptocurrencies and convert them into
technological landscape. anxiety as to the projected use of bitcoin legal tender for purposes of fee
2017 and 2018 saw the rise of cash payments, the liquidity of large payments.
cryptocurrency – virtual currencies that cryptocurrency assets, market volatility, Instituting strict due diligence checks
enable financial transactions between and the complexities associated with on applicants and agents alike, including
persons without the need for banks, or tracing the origin of cryptocurrency. enhanced due diligence, is therefore
other centralised financial In Malta, while cryptocurrency and essential to the sustainability of
intermediaries. Crucially, citizenship by investment have yet to be citizenship by investment in our cyber
cryptocurrencies allow secure formally intertwined, the government age: an old solution to a new problem.
In October 2017,
Vanuatu was widely
publicised as the
first citizenship by
investment nation
to accept bitcoin –
the world’s most
recognised
cryptocurrency -
but it subsequently
denied the reports
12 AUGUST/SEPTEMBER 2018DUE DILIGENCE CORPORATE STATEMENT
Developing
due diligence
DUE DILIGENCE
As more countries enter the
citizenship market, due
diligence will be a defining
element of differentiation
between their programmes
T
he CBI Index treats due
diligence as an asset. Within a
citizenship by investment
jurisdiction, a comprehensive
background screening policy, applied both
consistently and methodically, filters
criminals and other morally questionable
actors, as well as individuals who could
otherwise become a liability or a financial
burden to current citizens. Outside the
jurisdiction, it provides certainty to other Russia, as well as Moldova and Indonesia. A comprehensive Caribbean legislation or are enforced by
governments, which can trust economic Some citizenship by investment nations background the relevant Caribbean citizenship by
screening policy can
citizens to have been fully vetted. have expanded their commitment to due mean extensive investment unit through custom – but not
To the applicant, this translates into diligence from a merely domestic realm, to visa-free travel all citizenship by investment jurisdictions
citizenship of a country with sound borders, one that considers, and includes, entire rights for make a nod to the international
applicants, as other
strong national security, and high regions. With its Citizenship by Investment nations look community. Neither Cyprus nor Vanuatu,
international standing. Essentially, it also (Amendment) (No. 2) Act, 2017, for positively on the for instance, exclude applicants with a
citizenship by
means extensive visa-free travel rights, as example, Grenada amended its laws to history of visa refusals.
investment
other nations look positively on the refuse citizenship to any applicant who “is jurisdictions and Overall however, the trend among well-
citizenship by investment jurisdictions and denied citizenship by investment in another those who become established citizenship by investment
their citizens
those who become their citizens. Caribbean jurisdiction”. nations continues to be one of
This theory finds its test in St Kitts and Another call for unity was sounded with strengthening due diligence and
Nevis. In November 2014, the Federation the establishment of the Citizenship by international collaboration.
lost visa-free travel rights to Canada, which investment Programmes Association The 2018 Caribbean Investment
expressed concerns about the country’s (CIPA), whose founding members, Summit, held from 16 to 19 May, was
passport and identity management. Since Antigua and Barbuda, Dominica, Grenada, conducted under the theme ‘Unity in the
2015 however, and in the wake of an St Kitts and Nevis, and St Lucia, aim to Age of Division: Emerging Trends of CIPs
extensive internal and external review of its both harmonise and raise their standards in an Uncertain World’. On 21 May, 2018,
practices, St Kitts and Nevis has been and regulations. Cyprus announced it would inaugurate an
leading the charge in transparency and due Regard for global safety measures is a era of more enhanced due diligence, with
diligence. mainstay of several citizenship by application processing expected to last six
The result has been overwhelming investment jurisdictions. Malta, for months. On 22 May, 2018, Malta held its
support from the international community, example, bars any applicant who, without First Citizenship by Investment Due
evidenced by the Federation securing, in being able to demonstrate special Diligence Conference.
2018, the highest number of visa-free circumstances, “has been denied a visa to a As more countries enter the citizenship
destinations than any other Caribbean country with which Malta has visa-free market, due diligence will be a defining
citizenship by investment jurisdiction. travel arrangements and has not element of differentiation between
Some of the countries that recently signed subsequently obtained a visa to the country countries, their programmes, and the
travel treaties benefitting Kittitians and that issued the denial”. applicants who become their economic
Nevisians include traditionally isolationist Similar provisions exist across citizens.
PWMNET.COM 13The due diligence process
in the Caribbean
while their processes may not be Address verification – Each applicant
CASE STUDY
completely interchangeable, they all follow is required to detail his or her residential
The Caribbean CBI programmes are the same structure: requirements for history for at least the last 10 years.
generally associated with far-reaching extensive disclosure compounded by Verification of their current residential
due diligence, explains Heyrick Bond supporting documentation, address is undertaken, either through a
Gunning, CEO of S-RM comprehensive investigation by site visit or through contacts located in
independent and professional firms, and the country who are familiar with the
information exchange with both regional applicant.
and international entities involved in crime
D
ue diligence varies dramatically detection. It is this structure that greatly Passport verification – The passports
across citizenship by dissuades individuals who may hope to use of the applicant and any dependants are
investment (CBI) programmes the Caribbean’s CBI programmes to verified through an algorithmic check
– at one end of the spectrum circumvent the Common Reporting and by the respective issuing authority.
only basic disclosure requirements are Standard (CRS) or to conduct other illicit
implemented, while at the other extreme activity. Police clearance certificates –
there are transparent, thorough, and robust Growing interest in the topic of Applicants and all dependants (above a
requirements. The quality of a CBI immigration, and investor immigration in certain age) are required to provide
programme rests on its ability to embrace particular, makes it essential to provide certificates evidencing no criminal
transparent and at times exacting due clarity on the steps that are taken to records for each of the jurisdictions they
diligence processes, ongoing monitoring of examine individual CBI applicants in have resided in within the last 10 years. If
applicants in case their circumstances certain jurisdictions. It is in S-RM’s purview any further jurisdictions are identified,
change, and absolute clarity around the to provide that clarity with respect to the police clearance certificates are
on-boarding decision-making process. Caribbean, and to the reports that it requested by the CBI jurisdiction. The
The Caribbean CBI programmes are provides to the CBI jurisdictions in that authenticity of these police clearance
generally associated with far-reaching due region. Each report covers the following certificates is verified with the issuing
diligence, and with good reason. Indeed, areas: authorities.
Passport
verification is an
important
component of the
Caribbean
programmes’ due
diligence process
14 AUGUST/SEPTEMBER 2018CASE STUDY CORPORATE STATEMENT
Business profile – Applicants are
required to detail all business interests
and employment activity for at least the
last 10 years. These positions are
verified, and further searches are
conducted to ensure there are no
omissions. Investigations are undertaken
to ensure the legitimacy of these entities,
both in terms of registration and their
business activities.
Reputation – A thorough analysis is
conducted of the applicant’s business
reputation through online media and
litigation searches, as well as through
contact with professional acquaintances,
competitors, industry bodies, and a variety
of other sources, to certify that the
applicant presents no reputational
concerns.
AML/CTF/ABC – The applicant is
required to provide supporting
documents to validate reported financial political exposure. Information from
information, including corporate filings in-country contacts is also used to
(such as incorporation documents or determine any political links held and the
annual accounts), title deeds for land or risk they may present. Exhaustive due
property assets, stock portfolios, and
bank statements. This information is Due diligence is the most substantial
diligence reports,
then analysed for any signs of illicit
activity. The applicant’s business
contributing factor to a CBI
programme’s capacity to attract the right
such as the ones
interests are also investigated by individuals as citizens. Exhaustive due that are undertaken
in-country contacts to ensure there are
no allegations of unlawful or otherwise
diligence reports, such as the ones that
are undertaken on behalf of Caribbean on behalf of
dishonest activity. There is then a
detailed assessment of anti-bribery and
jurisdictions, should therefore be a staple
of all CBI programmes that aspire to
Caribbean
corruption (ABC), anti-money success and durability. jurisdictions, should
laundering (AML), counter-terrorism
funding (CTF), and related reputational
Heyrick Bond Gunning is CEO of S-RM.
be a staple of all CBI
and integrity risks. S-RM is among the panel of due diligence
providers that lend their expertise to programmes that
Sanctions, wanted lists, and political
exposure – The applicant, as well as his
jurisdictions with CBI programmes. S-RM
provides these services for several CBI
jurisdictions in the Caribbean and elsewhere
aspire to success
or her family, corporate affiliations, and around the world. S-RM also provides
similar services to the banking and private and durability
associates are checked through the equity sectors, corporate clients, and other
global wanted lists and sanctions governments. This has allowed S-RM to
acquire a broad understanding of the levels
databases to which we subscribe. The of due diligence undertaken across a variety
same individuals are run through global of sectors, and to be able to provide a sound
opinion on their strengths.
compliance databases to ascertain any
PWMNET.COM 15Overview of the
methodology
Each of the seven pillars is scored out
METHODOLOGY
of a maximum of 10 points, calculated
The CBI Index is built around seven on an averaging basis from the scores of
pillars, designed to satisfactorily composite indicators and sub-indicators. Reliance was only
measure global citizenship
programme features and
The maximum attainable score
achievable by a programme is 70, with all
placed on official
jurisdictional desirability final scores expressed in terms of a
percentage of the total points available.
sources and
For example, a perfect, 70-point score publications from
T
he CBI Index is a rating would be expressed as 100 per cent.
system designed to measure It should be noted that, due to the institutions of the
the performance and appeal
of global citizenship by
vast number of statistics, indicators, and
sub-indicators available for analysis, no
highest international
investment programmes across a broad
range of indicators. Its purpose is to
single approach exists for the rating of
citizenship by investment programmes.
standing and on the
provide a rigorous and systematic In framing the CBI Index however, specialised input of
mechanism for assessing citizenship reliance was only placed on official
programmes, to facilitate the decision- sources and publications from industry experts
making process for individuals institutions of the highest international
considering them, and to bring value to standing and on the specialised input of
the citizenship industry. industry experts, whose contributions
The CBI Index assesses all countries and responses were used to obtain and Freedom of movement within and
with operational citizenship by interpret both qualitative and between countries is of paramount
investment programmes, which today quantitative data used in the importance to any individual seeking
include the following 13 nations: Antigua construction of the CBI Index. second citizenship. This holds true
and Barbuda, Austria, Bulgaria, It should further be noted that, whether the individual wishes to travel
Cambodia, Cyprus, Dominica, Grenada, whenever possible, points were awarded for work purposes, to visit family, or for
Jordan, Malta, St Lucia, St Kitts and on the basis of evidence from official leisure.
Nevis, Turkey, and Vanuatu. sources and the letter of the law. Emphasis was placed on the total
A primary methodological objective Because announcements of changes to number of countries and territories that
was to isolate factors that could citizenship by investment programmes may be visited without applying for a
satisfactorily measure programme are often made many weeks and months visa. This included both visa-free and
features and jurisdictional desirability. in advance of their actual visa-on-arrival destinations, as neither
Seven factors, or ‘pillars’, were identified implementation, the CBI Index limits its require persons to receive a visa in
for this purpose. The seven pillars that evaluations to changes confirmed by advance of travel. Government and
constitute the CBI Index include: governments themselves and associated other official sources, including data
legal facts. from the United Nations World Tourism
1. Freedom of Movement Organisation (UNWTO), were used to
2. Standard of Living PILLAR 1: FREEDOM OF obtain up-to-date information on visa
3. Minimum Investment Outlay MOVEMENT requirements for holders of each of the
4. Mandatory Travel or Residence The Freedom of Movement Pillar 13 passports under evaluation.
5. Citizenship Timeline measures a passport’s relative strength by As business travel is a prime
6. Ease of Processing the number of destinations to which it consideration for prospective global
7. Due Diligence allows travel without restriction, and by the citizens, a passport’s ability to provide
amount of prime business hubs to which it access to the world’s leading economic
Arriving at an appropriate rating for provides access. It is assumed, for the and financial centres was also evaluated.
the seven pillars involved a complex purposes of this pillar, that the passport The World Bank’s Ease of Doing
combination of benchmarking, statistical used for travel is an ordinary passport, and Business Index, Forbes’ Best Countries
analysis, and comparative investigation. not a diplomatic or service passport. for Business, the World Economic
16 AUGUST/SEPTEMBER 2018METHODOLOGY CORPORATE STATEMENT
investors. Data was sourced from the
World Bank's Open Data Catalogue to
ensure accuracy and consistency.
The Standard of Living Pillar also
examines a country’s ability to promote
freedom, and to protect the rights of
individuals to act and to express
themselves without undue constraints.
Civil liberties and political rights within a
jurisdiction were rated as part of this
exercise, using sources such as Freedom
House’s Freedom in the World Index.
PILLAR 3: MINIMUM
INVESTMENT OUTLAY
The Minimum Investment Outlay Pillar
measures one of the most practical and
foremost considerations of citizenship
by investment: how much capital is
required for the investor to become an
eligible applicant for the programme of
his or her choosing.
The cost of applying for citizenship by
investment increases with the number of
dependants – or qualifying family
members – included in an application. In
some jurisdictions this increase is
Forum’s Global Competitiveness For this pillar, a wide range of official Freedom of proportional, while in others the cost
Report, and other authoritative sources indicators were considered to allow for movement within only increases following the inclusion of
and between
were used to arrive at a list of the top an accurate assessment. Consequently, countries is of multiple dependants. To remain
centres for international business. establishing an appropriate benchmark paramount consistent across all jurisdictions, it was
For both indicators, points were was of paramount importance, as a importance to any assumed that one applicant was applying
individual seeking
awarded on a descending scale, with the country’s score must be viewed both as second citizenship for citizenship alone. That is to say, that
highest score received by the passport an absolute value, and within the context the application consisted of a ‘single
with visa-free or visa-upon-arrival entry of the other citizenship by investment applicant’.
to the highest number of foreign countries – that is to say, as a relative Where a citizenship by investment
countries or territories. value. programme offers multiple investment
Reliance was placed on the United options, the most affordable option was
PILLAR 2: STANDARD OF LIVING Nations Human Development Index selected for evaluation. For example,
The Standard of Living Pillar is a measure (HDI) for factors such as life expectancy, Dominica offers a single applicant the
of the quality of life offered by the 13 education, security, and income. choice between a contribution to the
citizenship by investment jurisdictions Because past performance is not Economic Diversification Fund (EDF)
under assessment. This pillar is vital to always a guarantee of future results in and an investment in pre-approved real
those who yearn to relocate and to secure the field of economic growth in a rapidly estate, with the latter being the more
a prosperous and fulfilling lifestyle. developing world, a country’s latest expensive alternative. The EDF option
Similarly, it is key to those wanting to take annual GDP growth statistics were used was therefore used to determine the
advantage of local business opportunities, to indicate present-day economic minimum investment outlay for the
or needing to transfer and safeguard their circumstances as well as growth potential Dominica Citizenship by Investment
assets. – a particularly important indicator for Programme.
PWMNET.COM 17This pillar considers pure investment requirements. The lowest scores were
requirements, exclusive of minor fees attained by programmes with extensive
that may also apply. These may include requirements.
application, processing, or due diligence The speed at which
fees that do not significantly alter the
cost of a citizenship application.
PILLAR 5: CITIZENSHIP
TIMELINE
application forms
The highest number of points was
awarded to the country requiring the
The Citizenship Timeline Pillar looks at
the average time it takes for citizenship
and supporting
lowest minimum investment. to be secured by the applicant. documentation are
The speed at which application forms
PILLAR 4: MANDATORY TRAVEL and supporting documentation are processed, and the
OR RESIDENCE
The Mandatory Travel or Residence
processed, and the steps involved in
approving an application, vary from
steps involved in
Pillar examines the travel or residence
conditions imposed on applicants both
programme to programme. Therefore, a
thorough inspection of applicable laws,
approving an
before and after the granting of full regulations, and policies was made to application, vary
citizenship. Often busy with running a determine the official processing times
business or with international travel of mandated by each jurisdiction. from programme to
their own, citizens of the world have little
time on their hands to fulfil minimum
Extensive reliance was also placed on
first-hand experience from applicants,
programme
stay requirements. agents, and other stakeholders, whose
A careful examination of the laws, contributions proved to be an invaluable
regulations, and policies pertaining to tool in ascertaining citizenship timelines.
each citizenship by investment As one of the key merits of citizenship overall effortlessness of the application
programme was undertaken. First, it was by investment programmes is their process is a particularly critical
determined whether any travel or ability to provide a rapid route to second component and a smoother, hassle-free
residence prerequisites applied. Second, citizenship, the highest number of points process can generate readiness to
post-citizenship requirements were was awarded to the programmes with engage with a programme.
examined, as well as the consequences the shortest turnaround times. Multiple indicators were considered,
of failing to fulfil those requirements. Additional merit was given to commencing with entry qualifications
Third, the extent of the travel or programmes offering fast-track such as previous business experience or
residence requirements were analysed, processing options at an additional fee, fluency in a language. Knowledge of
with physical visits for the purposes of as these provide an extra layer of local history or culture assessments and
attending an interview, swearing an oath certainty for the applicant who is interview requirements were also
of allegiance, or giving biometric urgently in need of his or her second weighed.
information all taken into account. citizenship. By its very nature as a naturalisation
Additionally, mandatory travel that process, citizenship by investment
could only be waived or eased following PILLAR 6: EASE OF PROCESSING involves a significant amount of
the payment of a costly fee was also The Ease of Processing Pillar measures paperwork, including both forms and
given consideration. the end-to-end complexity of the supporting documents. Having the
In line with previous pillars, scrutiny citizenship by investment application support of an official government
focused on the main applicant rather process. In some jurisdictions, the website and of a dedicated citizenship
than any dependants that may be application process can be a labour- by investment unit to seek and obtain
included in the citizenship application. intensive and painstaking task that is clarification was thus an influential factor
As having year-round freedom to time-consuming for the applicant; in in awarding points to a programme.
travel is a highly-valued liberty, others, it is streamlined and the applicant Extensive communication with
programmes that waived residence and receives clear directives on how to advisors and legal experts is required
travel requirements achieved the best proceed. For the ever-busy, where a jurisdiction mandates the
score, followed by those with minimal internationally-minded individual, the purchase of real estate or other assets,
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