Cyprus so far strips 222 people of ‘golden passports’

Cyprus’s program was the poster child of corrupt citizenship-by-investment programs (not alone…):

The government of Cyprus has stripped 222 wealthy investors and their family members of citizenship, an official said Wednesday, part of efforts to mend a reputation sullied by an investment-for-passports program that an inquiry found had unlawfully granted citizenships in hundreds of instances.

Deputy government spokeswoman Niovi Parisinou said the figure includes 63 investors and 159 of their relatives, including spouses, children and parents.

Over its 13-year run, the once lucrative and now-defunct program repeatedly broke its own rules and granted Cypriot passports to ineligible investors. Some allegedly committed criminal and other offenses while becoming citizens of the Mediterranean island nation.

A torrent of corruption accusations followed an undercover TV report in 2020 that allegedly showed the parliamentary speaker and a powerful lawmaker claiming they could skirt the rules to grant citizenship to a fictitious Chinese investor supposedly convicted of fraud in his country.

Source: Cyprus so far strips 222 people of ‘golden passports’

The world’s most powerful passport for 2023 revealed

The usual marketing by Henley & Partners. Bit of a silly list as visa free travel is not the only reason the rich and ultra rich choose to obtain citizenship-by-investment:
A trio of Asian passports offer their holders greater global travel freedom than those of any other countries, according to a new quarterly report released by London-based global citizenship and residence advisory firm Henley & Partners.
Japanese citizens enjoy visa-free or visa-on-demand access to a record 193 destinations around the world, just ahead of Singapore and South Korea whose citizens can freely visit 192.
And now that Asia-Pacific is opening up post-Covid, its citizens are more likely to be making use of that travel freedom again.
Global travel is now at around 75% of pre-pandemic levels, according to the latest release by Henley Passport Index, which is based on data from the International Air Transport Association (IATA).
Below the Asian top three, a glut of European countries sit near the top of the leaderboard. Germany and Spain are tied on 190 destinations, followed by Finland, Italy, Luxembourg on 189.
Then there’s Austria, Denmark, Netherlands and Sweden all tied in fifth place, while France, Ireland, Portugal and United Kingdom are at No. 6.
New Zealand and the United States make an appearance at No. 7, alongside Belgium, Norway, Switzerland and the Czech Republic.
Afghan nationals sit at the bottom of the index once again, and can access just 27 countries without requiring a visa in advance.

Other indexes

Henley & Partner’s list is one of several indexes created by financial firms to rank global passports according to the access they provide to their citizens.
The Henley Passport Index ranks 199 passports according to the number of destinations their holders can access without a prior visa. It’s updated in real time throughout the year, as and when visa policy changes come into effect.
Arton Capital’s Passport Index takes into consideration the passports of 193 United Nations member countries and six territories — ROC Taiwan, Macau (SAR China), Hong Kong (SAR China), Kosovo, Palestinian Territory and the Vatican. Territories annexed to other countries are excluded.
It’s also updated in real time throughout the year, but its data is gathered by close monitoring of individual governments’ portals. It’s a tool “for people who travel, to provide accurate, simple-to-acess information for their travel needs,” Arton Capital’s founder Armand Arton told CNN in December.
Arton’s Global Passport Power Rank 2023 puts the United Arab Emirates in the top spot, with a visa-free/visa-on-arrival score of 181.
As for second place, that’s held by 11 countries, most of which are in Europe: Germany, Sweden, Finland, Luxembourg, Spain, France, Italy, Netherlands, Austria, Switzerland and South Korea.
The United States and the UK are at No.3, alongside Denmark, Belgium, Portugal, Norway, Poland, Ireland and New Zealand.

The best passports to hold in 2023, according to the Henley Passport Index

1. Japan (193 destinations)
2. Singapore, South Korea (192 destinations)
3. Germany, Spain (190 destinations)
4. Finland, Italy, Luxembourg (189 destinations)
5. Austria, Denmark, Netherlands, Sweden (188 destinations)
6. France, Ireland, Portugal, United Kingdom (187 destinations)
7. Belgium, New Zealand, Norway, Switzerland, United States, Czech Republic (186 destinations)
8. Australia, Canada, Greece, Malta (185 destinations)
9. Hungary, Poland (184 destinations)
10. Lithuania, Slovakia (183 destinations)

The worst passports to hold in 2023, according to the Henley Passport Index

Several countries around the world have visa-free or visa-on-arrival access to 40 or fewer countries. These include:
102. North Korea (40 destinations)
103. Nepal, Palestinian territory (38 destinations)
104. Somalia (35 destinations)
105. Yemen (34 destinations)
106. Pakistan (32 destinations)
107. Syria (30 destinations)
108. Iraq (29 destinations)
109. Afghanistan (27 destinations)

Source: The world’s most powerful passport for 2023 revealed

Savory & Partners: Birthright citizenship and the exciting world of birth tourism

Have an update on Canadian numbers forthcoming but in the meantime, the marketing by one of the major citizenship-by-investment firms:

Jus Soli, or birthright citizenship, is a concept that has been applied for centuries throughout various countries. The premise of birthright citizenship is simple; those born within a country’s borders are granted direct citizenship.

However, in practice, birthright citizenship can get quite complicated, as each country continues to set its own laws and restrictions.

What is Jus Soli?

In April this year, Portugal passed a legislation regarding Jus Soli. According to this law, after one year of having a Portuguese residency, should you have a child born, they would be able to obtain Portuguese nationality immediately.

The idea of obtaining a preferable citizenship for one’s children remains a major attraction, and in a world where travel times are short and visas are plentiful, it has given birth to a new type of tourism altogether – birth tourism.

“Jus Soli, or birthright citizenship, is a concept that has been applied for centuries throughout various countries. The premise is simple; those born within a country’s borders are granted direct citizenship.”

Birth tourism refers to those who obtain a visit visa to give birth to their child in a country that has Jus Soli laws in place, allowing them to obtain a citizenship for their newborn.

Unlike immigrants giving birth to their children abroad in their new country of residence, birth tourism only requires a visit visa and a well-timed trip.

One of the countries with the highest birth tourism rate is unsurprisingly the USA, as the nation has unrestricted birthright citizenship laws in place, allowing anyone born on its land to obtain US citizenship directly.

While birth tourism is not easily tracked, the Center For Immigration Studies, a US based think tank, estimates that 33,000 people on visit visas give birth in the US each year. The center also states that most of these birth tourists hail from China, Taiwan, Korea, Nigeria, Turkey, Russia, Brazil, and neighboring Mexico.

The premise of birth tourism has quickly grown, but those considering it must be aware of the country’s birthright citizenship laws, as not all Jus Solis are born equal, and traveling to a country to give birth for the purposes of gaining citizenship without understanding birthright citizenship regulations can be a costly and futile affair.

Understanding Birthright Citizenship

First, there are unrestricted and restricted birthright citizenship laws. Unrestricted birthright citizenship means that anyone born on the soil of a nation will automatically obtain citizenship, no matter their circumstances. This is the case in the US, Canada, and even Brazil, which many estimate may be one of the most birth-touristic countries in the world thanks to its powerful passport and easy visa process.

Other countries have restricted birthright citizenship, which means that in addition to being born within the country’s jurisdiction. This is the case in the UK and Ireland, for example, where to gain citizenship in the former, one of the newborn’s parents must either be a citizen or a settled resident in the UK. Settled in this context refers to someone on a permanent residence permit, or an indefinite leave to remain in the UK.

As for Ireland, one of the parents must actually be a full-fledged citizen, hence negating the entire premise of birth tourism.

Most countries allow the children of their citizens born abroad to apply for citizenship; and with a few exceptions such as Saudi Arabia requiring the father to be a Saudi national for the child to obtain citizenship, it allows for people who venture into birth tourism to obtain dual citizenship for their newborn on the day they are born.

Understanding the laws of birthright citizenship is the first obstacle, the second is getting to the country at the right time. This usually requires a visa, unless a person has visa-free travel to a country, and in the case of the US, it is difficult for pregnant women to obtain B1 or B2 visas during their second and third trimesters.

The Dual Benefits of a Dual Citizenship

Nevertheless, birth tourism remains highly attractive, especially for those who have already obtained a second citizenship through investment. For example, a person that obtains a Maltese citizenship through investment gains the ability to travel visa free to the US and Canada, two countries with unrestricted birthright citizenship, and the latter even provides free healthcare.

By getting a Maltese citizenship, a person can structure it so that their child is born in the US or Canada, giving them a third citizenship in the process, in addition to the Maltese one and their original citizenship, essentially tearing down all mobility obstacles in their child’s path and providing them with the tools they need to fulfill their potential.

Another simplified route that allows people to get another citizenship for their children is through the Portuguese golden visa, which awards those who invest in Portugalwith a residency permit for themselves and their family members. If a person has a golden visa and has a child within Portugal then that child can become a citizenship after one year of their birth. As the golden visa has a fast track to citizenship after five years and minimal residence (just seven days a year), it is an excellent option for those looking to get a second citizenship for their children in a relatively short time frame while also laying the groundwork for getting the citizenship themselves a little farther in the future.

Birthright citizenship on its own remains a very interesting topic, however, when combined with citizenship by investment, it can yield outstanding results that are open to very few people around the world.

To know more about citizenship through birthright or investment, contact us today to talk with one of our second citizenship experts.

Source: Savory & Partners: Birthright citizenship and the exciting world of birth tourism

MPI: Rollback of ‘Golden Passports’ Shows Their Elusive Shine

Good in-depth discussion of the practice and related issues.

Money quote: “greater concerns have emerged when CBI programs interfere with good governance, resulting in corruption of public officials, scandals, money laundering, or tampering with elections. These have been a rule rather than an exception in every single existing investor citizenship program:”

Little more than a month after Russian forces invaded Ukraine in early 2022, Bulgaria, Cyprus, and Malta began to heed the call of the European Union’s institutions advocating the abolition of “golden passports” by cracking down on Russian oligarchs, who were among the key beneficiaries. Formally known as citizenship by investment (CBI) programs, these schemes enable individuals to become citizens of a country by means of an economic contribution, often without any other substantive conditions such as residency periods, local language knowledge, or civic tests.

These programs have been a heated topic in the European Union ever since October 2013, when Malta decided to offer its passport in exchange for investment in the country’s economy. Its Individual Investor Program ran between February 2014 and September 2020, and that November the country introduced a new route for investors to receive citizenship after three years of residence, which could be reduced to one year on the basis of providing “exceptional services.” The pushback from EU institutions against these schemes has been driven by three main concerns: that national citizenship is a gateway to rights such as free movement across the bloc, that these programs often lead to corruption of public officials, and that investors do not have a genuine connection with their new country. In late September, the European Commission referred Malta to the Court of Justice of the European Union, claiming its program was incompatible with the concept of EU citizenship and violated the Treaty on European Union.  

Previously, these concerns did not substantively resonate with Bulgaria, Cyprus, and Malta, but security unease amidst the war in Ukraine did. Bulgaria and Cyprus have since discontinued their CBI programs; Malta has fully abolished it for Russian and Belarussian citizens. On top of that, authorities of Cyprus and Malta have already initiated several withdrawals of investment-based passports previously granted to sanctioned Russians and Belarusians supportive of the war in Ukraine; at this writing, Bulgarian authorities were reviewing the beneficiaries of their CBI program to see if any were under sanction.

CBI programs are a part of a much broader phenomenon of investor migration, which also includes the more widespread “golden visas,” or residence by investment (RBI) programs. These kinds of schemes enable investors to gain residency rights in a country by purchasing a house, as is the case in Greece, Portugal, and Spain; making a financial investment, as in Canada, Ireland, and the United Kingdom; or creating a certain number of jobs, as required under the American EB-5 visa.

Unlike the RBI programs, which frequently require investors to effectively migrate to the destination country, CBI documents are often used only for international mobility or as insurance. So why are they so controversial?

This article discusses the history of citizenship by investment, the main beneficiaries of CBI programs, the benefits and criticisms associated with them, and what the future might have in store for these programs.

Are “Golden Passports” a Novelty?

Investment-based citizenship is often perceived as a new phenomenon. Yet obtaining legal status through wealth is not a historical novelty. Romans, too, offered citizenship to men who could afford it, provided they also met other requirements such as residence, ethnicity, and military service. Things have changed since. Nowadays, a financial contribution is all that is needed to secure the passport of a country running a CBI program. The amount can be as low as USD 100,000, as in the Commonwealth of Dominica. It can be as high as 3 million euros, as was required in Cyprus in 2014 and 2015 to address consequences of the 2013 international bailout from the financial crisis.

What has caused this development, where is it possible to obtain citizenship in exchange for an investment, donation to the government, or real estate purchase, and why?

The first modern-day CBI programs emerged in islands in the Caribbean and the Pacific, shortly after they became independent from large colonial powers. The process of decolonization took a particular toll on these microstates. As a result of their small size, unfavorable climate and terrain, or remote geographic location, these new nations were faced with major economic adversities, often threatening their survival as sovereign states. These conditions stimulated the sale of passports in the Marshall Islands, Nauru, Samoa, Tonga, and Vanuatu in the 1980s and the 1990s. Such practices were often done informally by public officials, who would provide investors with passports short of full citizenship. For instance, people who leased land in uninhabited parts of Tonga would receive a Tongan Protected Person Passport (TPPP). This document did not give holders the right to enter the country or live in it but rather served as a travel document.

The first official CBI program was established by Saint Christopher and Nevis in 1984. In the years that followed, the island state introduced legislation that enabled the grant of citizenship for those who invested in real estate or donated to special funds. One such fund was aimed at diversification of the workforce previously employed in the country’s now nonexistent sugar industry. In the two decades that followed, citizenship by investment was an oddity, confined mostly to tropical islands. It was an issue that attracted hardly any public attention.

The scene changed substantively with the 2008 global financial crisis, which drew a number of countries towards alternative mechanisms for raising revenue, including the development of three main investment migration routes. More than 140 states have general provisions in their existing citizenship laws to naturalize individuals who contribute to their national interest, such as artists, athletes, scientists, and investors. A few other countries such as Bulgaria, Cyprus, Malta, Moldova, Montenegro, and Turkey developed CBI schemes similar to those in the Caribbean and Pacific states. And a majority of the world’s countries opened routes for investors—coupled with tax relief—to become residents, with the possibility of obtaining citizenship after a number of years and subject to meeting language, civics, and other requirements.

Discretionary provisions in citizenship legislation, CBI, and RBI programs have often been conflated, despite having distinct roots, objectives, and target beneficiaries, and despite raising different concerns in the context of good governance (such as corruption and money laundering) or the economy (such as skyrocketing real estate prices).

The Growth of a Citizenship Industry

Lack of understanding of the different ways in which CBI and RBI schemes operate has, in part, been caused by the growing market for investor citizenship and residence. Over the past two decades, this market has given birth to and raised a citizenship industry composed of companies that act as intermediaries between states operating these programs and individuals seeking to benefit from them. This industry includes large multinational companies such as Arton Capital, CS Global, and Henley and Partners, which often provide a wide range of services to states including designing and marketing the new program or running it through a concession. These companies may also offer their services to individuals to assist with the application, manage funds, or lease and purchase property. The industry has also branched out through specialized firms such as BDO, Exiger, and Thomson Reuters, which are engaged in due diligence of applicants, or Astons and JM, which manage real estate purchases. The industry’s final component is local law firms and agents, which facilitate investor applications through their knowledge of the language and the local context.

Citizens used to be unaware of the growth of this industry. That is until they read an in-flight magazine in which companies acting as intermediaries advertised specific programs and their own services, or passed through the Zurich Airport where until recently the passport of Malta was displayed in a shop window next to a luxury watch retailer. The industry is no longer unknown, due to a combination of factors including new marketing strategies and engagement of intermediary firms with the media. There has also been a growing public interest in the profile of beneficiaries, corruption scandals, and public protests associated with these programs.

A Connection to Mobility and Life Opportunities for a Select Few

As the international order became reconstituted after World War II, the governance of cross-country mobility became highly diversified. With the growth of global interconnectedness, possessing a particular passport determined the number of countries one could access, the countries in which one could settle, and where one could do business. Passports became connected with mobility and life prospects—both highly unequal around the world and both very much dependent on one’s birth. The increasing tolerance of dual nationality since the 1960s also enabled individuals to acquire additional passports without losing that of their country of origin, as had previously been the case.

Those obtaining citizenship by investment are, however, a tiny minority compared to the total pool of people who become citizens of a foreign country. This is nearly always the case in countries that grant citizenship to investors on grounds of national interest, where numbers are capped (for example Estonia limits these to ten applications annually) or where parliamentary approval is required, as in Bulgaria and Latvia.

The exact numbers of people who obtain citizenship through official CBI programs in most cases are not in the public domain. The majority of countries have no reporting obligations and public authorities are often slow or unwilling to provide the information. The background study for a 2019 European Commission report revealed that 12 applications were approved in Bulgaria in 2017 and at least 738 were approved in Malta from the program’s launch in 2014 until 2017. While no information on the number of applications in Cyprus was available in the report, a subsequent Al Jazeera investigation discovered that between 2007 and 2020 Cyprus granted citizenship in 6,779 instances to investors, mainly of Russian origin. In September 2020, Malta’s authorities confirmed that program reached its 1,800 approved applications cap; the more recent program is capped at 400 certificates annually and 1,500 overall, however there is no information on how many have been granted so far.

Numbers of those who obtained a passport from countries outside the European Union are even more difficult to ascertain. Grenada and Antigua and Barbuda reported 303 and 330 applications respectively in 2017; in 2018, the government of St. Kitts and Nevis reported that, since the opening of the program in 1984, a total of 16,544 investor citizenships had been granted. After lowering the investment threshold to USD 250,000 in 2017, by September 2021 Turkey had granted 7,242 passports to foreign investors, mostly of Iranian, Yemeni, Afghan, and Iraqi origin.

Whose Passport Is “Golden”? 

Different passports come with different opportunities. Being born a U.S. citizen or a citizen of an EU country comes with substantively more personal and travel freedom than, for instance, being born as a Kosovan or Congolese citizen. This fact sets the financial parameters of the global market for investor citizenship and has a major impact on the structure of beneficiaries.

Unsurprisingly, “price tags” on passports of Bulgaria, Cyprus, and Malta were substantively higher than those of the Caribbean and Pacific countries, or of Moldova, Montenegro, and Turkey. The program running in Malta between 2014 and 2020 entailed an overall investment in the range of 1.15 million euros, and the one introduced in 2020 refers to an unspecified direct investment. Cyprus, which required investments between 2 million and 3 million euros between 2014 and 2022, had the scheme with the highest contribution. These two CBI programs directly offered rights of EU citizenship, such as free movement across the European Union. Passports of Cyprus and Malta also grant visa-free access to 176 and 183 countries, respectively, slightly more than the 173 accessible to holders of a passport from Bulgaria, where the recently terminated CBI program required an investment in the range of 500,000 euros.  

The combination of the type of investment required and mobility rights attached to citizenship determined who would be interested in and able to become a CBI program beneficiary. For instance, the Cypriot program has had a disproportionate number of Russian applicants, in part because in 2014-15 it provided a special route for individuals who had lost more than 3 million euros due to a levy on foreign deposits imposed as a result of the economic bailout. Turkey’s program largely attracts investors from the Middle East, for whom the mobility rights attached to the Turkish passport are much higher than those of their countries of origin. As of September 2022, a Turkish passport provided visa-free access to 110 countries worldwide, while those of Afghanistan, Iraq, Syria, and Yemen offered access to fewer than 35 countries each.

Beyond mobility rights linked to different passports, there are a series of other motivations that wealthy individuals may have in obtaining citizenship by investment. First, additional passports might offer a Plan B for escaping political and economic instability.

Second, most CBI programs are coupled with preferential tax regimes, which may be an important motivation for individuals with very high incomes. This potentially exempts them from paying taxes in jurisdictions in which they are not physically present or of which they are not citizens. For instance, St. Kitts and Nevis, with no personal income tax and low value-added tax (VAT), has become an attractive destination for wealthy Americans seeking to renounce their U.S. citizenship.

Third, for the rich from poor countries, a passport from a nation in the so-called Global North is also a status symbol that differentiates them from less affluent conationals. Speaking to Bloomberg News in July 2018, the chairman of one of the intermediary companies involved in the citizenship industry noted, “If you have a yacht and two airplanes, the next thing to get is a Maltese passport. It’s the latest status symbol. We’ve had clients who simply like to collect a few.”

Finally, obtaining a passport through a CBI program may serve some less noble purposes. In 2010, the former Prime Minister of Thailand, Thaksin Shinawatra, who had faced corruption charges in his native country, was able to avoid extradition by having obtained a passport from Montenegro. Indian diamond mogul Mehul Choksi, charged with embezzlement in India, sought shelter in 2018 in Antigua and Barbuda, a country where he had previously become a citizen by investment. Russian oligarchs close to President Vladimir Putin, as well as Ukrainian rent-seeking billionaires have gained protection on EU soil by acquiring Cypriot and Maltese passports.

The Dark Side of CBI Programs

The box of questions surrounding CBI and RBI programs is yet to be fully prized open. So far, there have been no systematic studies of the economic impact of these programs, which would highlight potentially beneficial aspects such as job creation or construction of roads, hospitals, and other infrastructure projects. However, a 2015 report of the International Monetary Fund (IMF) highlighted that funds from investor citizenship in recent years have come to account for substantive portions of gross domestic product (GDP) in some small island states. Recent IMF studies point out that, between 2012 and 2021, as much as 30 percent of the GDP of St. Kitts and Nevis and the Commonwealth of Dominica came from investments from CBI programs. In 2020, revenue from Vanuatu’s CBI program amounted to 42 percent of the national budget, raising questions of potential overdependence on CBI.

Yet balancing economic benefits and potential dependency is not the most contentious aspect of these programs. While many have questioned whether it is just to exchange passports for investment, greater concerns have emerged when CBI programs interfere with good governance, resulting in corruption of public officials, scandals, money laundering, or tampering with elections. These have been a rule rather than an exception in every single existing investor citizenship program.

For instance, since 2017, citizens of the Commonwealth of Dominica have been protesting the country’s CBI program, which international observers such as Freedom House also regard as controversial. The protests were sparked by the country’s opposition, which demanded the prime minister resign because of corruption linked to construction fraud involving CBI beneficiaries from Iran and China. Initially focusing on domestic issues raised by the CBI program, the protests gained an international dimension when concerns emerged over how the program helped the growth of Chinese and Iranian influence in the Caribbean islands, and the potential adverse effects of such influence on Dominica’s relationship with the United States.

In the same vein, the program in Malta had been connected not only to abuse of power by public officials whose family members had a stake in CBI services, but also to the October 2017 assassination of Maltese investigative journalist Daphne Caruana Galizia. Prior to her death, Caruana Galizia had been investigating connections between high-ranking government officials involved in investor citizenship and payments from the government of Azerbaijan. The scandal that unfolded around the murder investigation eventually led to the resignation of Maltese Prime Minister Joseph Muscat. These and many other instances of institutional corruption, including allegations that the citizenship industry used the political strategy firm Cambridge Analytica to influence elections to create a favorable environment for introducing CBI programs in places such as Malta and St. Kitts, have sparked substantive international criticism of investor citizenship.

The Organization for Economic Cooperation and Development (OECD), Transparency International, and Global Witness are among the organizations that have highlighted the potentially contentious aspects of CBI programs. The European Commission and the European Parliament have been particularly active in seeking to phase out programs in Bulgaria, Cyprus, and Malta. Given that CBI programs in the European Union are connected to the rights of European citizenship—including free movement—any citizen of Malta has the right to settle in any of the 27 EU Member States. For this reason, even though granting citizenship is the sole prerogative of sovereign states, the citizenship regimes within the European Union are interconnected and can obligate other Member States.

EU institutions have continuously voiced concerns over whether the bloc’s citizenship should be for sale and have raised questions over the potentially adverse effects of CBI programs run by Member States. The 2019 European Commission report on investor citizenship and residence schemes highlighted some of the effects and their implications across the bloc. A year later, the European Commission took legal action against Cyprus and Malta on the basis that CBI programs are not “neutral with regard to other Member States and the EU as a whole,” and that individuals obtaining passports in such a way have no “genuine connection” to the country of which they are becoming citizens. While Cyprus has terminated its scheme, Malta is as of this writing facing a process at the Court of Justice of the European Union for continuing to apply its 2020 scheme, which the European Commission finds to be incompatible with the concept of “Union citizenship” and the principle of “sincere cooperation,” both of which are enshrined in treaties governing the bloc.

The Future of “Golden Passports” 

The future of CBI programs will depend on how countries decide to respond to a range of global events and dynamics.

Issues such as major natural disasters linked to climate change or global security concerns could amplify demand on CBI programs due to individuals’ need to have a Plan B. The same issues might equally reduce the number of countries offering such programs due to fears of foreign influence increasingly associated with these schemes. These two trends are perhaps not even mutually exclusive. But they will influence the market for investor citizenship going forward.

As countries become more selective as to whom they want as citizens and under what conditions, they may decide that beneficiaries of CBI programs have a risky background and stop offering such passports. Alternatively, as intermediary industries become more powerful due to growing demand, they might be able to exercise political and economic influence on some countries to keep running their CBI programs, or on others to open new ones.

The most likely scenario is that of Cyprus or Malta, where CBI schemes have transformed into residence by investment programs or grants of citizenship based on exceptional service with unspecified contributions. These may be different legal routes but raise similar issues. Governments looking to address such concerns might ensure that these residence permits and any subsequent grant of citizenship be accompanied by mandatory physical presence and socialization requirements that require the holder to relocate to the destination state and actually live there. The question is whether the shine of such golden visas will be as elusive as that of golden passports.

Source: Rollback of ‘Golden Passports’ Shows Their Elusive Shine

Cyprus to revoke 10 more passports issued under discredited citizenship scheme

Of note:

Cyprus on Wednesday said it would strip citizenship from 10 individuals, among thousands who benefited from a cash-for-passports scheme which collapsed under accusations of corruption in 2020.

Cyprus gave passports to more than 7,000 people under a citizenship scheme which in its final form gave citizenship to individuals investing a minimum 2 million euros. It was popular with Russian and Asian investors.

Wednesday’s cabinet decision involved three investors and seven dependants, government spokesperson Niovi Parisinou said in a written statement, without identifying the people or their nationalities.

The process to revoke citizenship had started against 60 investors and 159 family members in total since last October, she said.

Six individuals have already had their passports revoked, Parisinou added.

Once championed by the government, the passport scheme was abandoned in 2020 after a barrage of news reports suggesting that fraudsters and fugitives from justice had benefited along with bona fide investors. The European Union also frequently raised misgivings about the programme.

Two official investigations have said the scheme ran without adequate oversight, with one report suggesting some investment transactions could have been fictitious.

Source: Cyprus to revoke 10 more passports issued under discredited citizenship scheme

The Super-Rich Are Already Plotting Their Escape From Trumpism – Mother Jones

Numbers are very small but an interesting increase nevertheless:

This is not a time of optimism in America. People are reeling from inflation, gun violence, partisan rancor, race-baiting, a ruthlessly divisive Supreme Court decision, the long tail of a pandemic, and the very real prospect of political violence. A significant majority of the public, polls suggest, thinks the nation is headed in a bad direction. Nearly three-quarters of the people NBC News polled in August said as much, and more than a thirdpredicted that things would get worse over the next five years.

Our societal dysfunction has progressed to the point where many well-heeled Americans are looking for an escape hatch. And David Lesperance’s phone is ringing off the hook.

Lesperance, whom I profiled for Mother Jones in 2017, is a Canada-born lawyer who has specialized in arranging foreign citizenships for extraordinarily wealthy people, from athletes and celebrities to founders, investors, and corporate bigwigs with assets ranging from about $25 million to $20 billion. He calls them “golden geese” because they pay an awful lot in taxes. (They manage to avoid an awful lot, too.)

Over the years, Lesperance—who now lives in Gdynia, Poland—has helped hundreds of ultra-high-net-worth Americans relinquish their US citizenship, usually in order to escape the long arm of the IRS. (The United States is the only country besides Somalia that imposes taxes based on citizenship, not residency.) Other US clients just want a contingency plan—a legal “go bag” containing an extra passport or two—that a family might deploy if the taxman ever gets too aggressive.

But the Trump years were pretty good for America’s richest,and expatriation is expensive. The government charges a steep exit tax: a one-time capital-gains levy of 23.8 percent on the combined net value of a person’s assets. If that’s $1 billion, you’ll have a $238 million tax bill, plus legal fees.

Lesperance and his frequent collaborator, Massachusetts-based attorney Melvin Warshaw, saw interest in their IRS-avoidance services surge in November 2020, after Joe Biden, who pledged to make America’s wealthiest families “finally pay their fair share,” defeated Donald Trump. They saw another spike in January 2021, when Democrats took the Senate, and again in March 2021, when Elizabeth Warren rolled out her Ultra-Millionaire Tax Act.

Also good for their business was Biden’s Build Back Better plan, which aimed to boost taxes on capital gains and corporate income, end the carried interest tax loophole, and kill GRATs—sneaky legal entities that half of America’s richest families now rely upon to pass huge tax-free fortunes to their heirs. That failed Democratic effort was followed by Sen. Ron Wyden’s (similarly doomed) billionaire tax plan and Biden’s short-lived encore—both nixed by Sen. Joe Manchin. Mega-wealth crisis averted!

But the two lawyers more recently began seeing a new trend, Lesperance says. Namely, “clients engaging us not for tax reasons, but rather to have an alternative should the US turn into MAGA America.”

Unlike their tax-obsessed clients, Warshaw explains, the new crowd isn’t looking for a permanent exit: “They’re saying, ‘I want options. I don’t mind paying high income tax, it’s just things are getting real hot in the kitchen and I want the ability to bug out—to go somewhere else for a while, because I don’t know what’s going to happen in the 2022 election. And I have little kids. I want a safe place for them.’”

Recent developments, particularly the Supreme Court’s reversal of Roe v. Wade, have fueled demand for dual citizenship even among the non-wealthy. But securing one is pricey if you don’t have a relative who is a citizen elsewhere. Lesperance’s new “client zero,” he says, dates to early this year, when the Atlantic ran an essay titled, “Trump’s Next Coup Has Already Begun.

Technically, the next attempt to overthrow a national election may not qualify as a coup,” staff writer Barton Gellman began, ominously:

“It will rely on subversion more than violence, although each will have its place. If the plot succeeds, the ballots cast by American voters will not decide the presidency in 2024. Thousands of votes will be thrown away, or millions, to produce the required effect. The winner will be declared the loser. The loser will be certified president-elect.

The prospect of this democratic collapse is not remote. People with the motive to make it happen are manufacturing the means. Given the opportunity, they will act. They are acting already.”

Gellman hit a nerve. Three would-be clients cited the essay in a span of two days, Lesperance says: “There’s a significant fear there. They look at the daily news, they see, ‘Okay, [Supreme Court Justice Samuel] Alito said this [Dobbs decision] only deals with abortion, and [Clarence] Thomas goes on in his dissent to say, no, we’re winding up for this, we’re throwing it back to the states.’ And then they see politicians talking about a nationwide ban on abortion. They see a very legal search done on Mar-a-Lago,” and all of a sudden people are talking about civil war.

When Warshaw returned to work from vacation the week after a draft of the Dobbs decision leaked, nine new inquiries awaited him—one or two per week was the previous norm—from clients sufficiently alarmed to drop $500 on an initial telephone consultation. “That at least showed me that they were ready to put some money on the line,” he says.

“I did three of them today. And two yesterday,” Lesperance adds. For every client interested in expatriating for tax purposes, he estimates, “we now see 10 looking for a bug-out.” Securing a dual citizenship is an unfamiliar experience for most Americans, “so there’s a very big learning curve. The last call I had, the guy kind of panicked and had laid out money for like five different things—of which he only needed one.”

Since June 24, the date of the official Dobbs ruling, he and Warshaw have signed on 23 new clients—of whom only a handful were tax-motivated. Another 36 have completed consultations and received engagement letters, and 14 more are awaiting their consultations. In addition to super-rich clients, the new crop includes some professionals in the $5 million to $10 million range.

They are concerned, roughly in this order, Lesperance says, about the state of American democracy (voter suppression, rejection of election outcomes, MAGA subversion), the outlawing of abortion and what the court may do next, and the specter of domestic terrorism and mass shooting events.They aren’t necessarily liberal. One client, a billionaire hedge-funder who would call himself a Reagan Republican, Lesperance says, just didn’t want his little kids to have to deal with the trauma of active shooter drills at school. He knew they probably wouldn’t ever be victims of a mass shooting, “but he knows that they’re going to be thinking about it every time they go to soccer practice or McDonald’s or SpongeBob’s new movie.” So he’s arranging for his wife and kids to live in a less trigger-happy country, and he’ll fly back and forth to be with them.

The new clients also include “a bunch” of former high-level government officials who served under Presidents Barack Obama and George W. Bush—“remember, to a MAGA you’re a RINO if you served for W,” Lesperance says. They “really got freaked out, not only by Dobbs but also by Trump’s announcement that he’s gonna get rid of the civil service and replace it with loyal flunkies.”

One would hope people who believe in good governance might stay around and fight the good fight. It’s not as though they are giving up, Lesperance says. “They’re sitting there saying, ‘I have a giant target on my back. So, yes, I’m gonna vote. Yes, I’m gonna join organizations and fund organizations to get voter registration. I’ll call that fire prevention,’” he says. “‘But I’m also gonna get fire insurance. And you know, depending on the outcome in the midterms, and what outcome comes in the general, I want to be able to bug out, and I want to take my family.’”

Source: The Super-Rich Are Already Plotting Their Escape From Trumpism – Mother Jones

The Evolving Price of U.S. Citizenship [by investment EB-5]

Useful overview and history of the US citizenship by investment program:

Wealthy foreigners have had special access to U.S. citizenship since 1990. For $900,000, then $1.8 million, and now $1.05 million, the EB-5 Visa program has offered a 2-year path to citizenship. Over the last 14 months, the path has changed, disappeared, and reappeared in different forms.

Uncertainty has stalled visa applications and large commercial projects. But with passage of legislation in March, 2022, and upcoming regulations by U.S. Citizenship and Immigration Services (“UCSIS”), much of the path is now clear again. This article provides a short history of the EB-5 program, recounts key events from the last 14 months of chaos, and walks through the rules to know going forward.

The Basics of EB-5

As UCSIS puts it, Congress created the EB-5 path to citizenship to “benefit the U.S. economy by providing an incentive for foreign capital investment that creates or preserves U.S. jobs.” It’s the fifth “employment-based” path to permanent residency after those for (1) priority workers, (2) professionals holding advanced degrees, (3) skilled workers, and (4) “certain special immigrants.” Before 1990, a foreign investor who couldn’t meet those criteria had limited options, even if wealthy.

Those granted an EB-5 visa receive conditional permanent resident status for a 2-year period (i.e., a “green card”). After two years of compliance with the requirements (discussed below), permanent residence is pretty much guaranteed. The same benefits apply for one’s immediate family members.

In 1992, Congress authorized the use of “Regional Centers,” allowing foreign investors to pool investments in a single (though typically larger) enterprise that satisfies the EB-5 requirements for multiple investors. As of the end of 2021, over 632 Regional Centers have been authorized to accept EB-5 investments.

Who and How Many?

The EB-5 program is limited by statute to 10,000 visas annually. In 2019, of the 9,478 EB-5 visas, UCSIS granted 77% of visas to investors from Asia. 96% of visas granted were based on investment in a Regional Center.

Foreigners have invested over $40 billion in U.S. businesses through the EB-5 program. In 2019 alone, EB-5 applicants invested over $5 billion.

A Recent End to Uncertainty

Three events in the last 14 months upended the EB-5 process and community.

On June 22, 2021, a federal district court in California invalidated regulations from 2017 governing the EB-5 program. Among other things, the regulations had doubled the standard investment threshold from $900,000 to $1.8 million. The court held that the regulations were improperly created and effectively revoked them.

One week later, on June 30, 2021, the statutory authorization for Regional Centers expired. This has occurred several times before, and each time creates significant uncertainty for all involved. Without authorization, Regional Centers cannot support new EB-5 visas.

The expiration was partly cured this March with the enactment of the EB-5 Reform and Integrity Act of 2022. The law re-authorized use of Regional Centers through 2027, but also surprised many by repealing the previous statutory authorization. As a result, USCIS announced that “regional centers previously designated…are no longer authorized” and must seek redesignation. Business associations focused on the EB–5 program have expressed concerns and at least one regional center has sued.

Evolving Eligibility

Eligibility for an EB-5 visa requires that a foreigner make (1) an at-risk investment of (2) a threshold amount (3) of legally obtained funds in (4) a new U.S. business in which (5) the foreigner actively participates and that (6) creates at least 10 jobs. Requirements 3, 4, and 5 are usually easy to satisfy, and 6 much more so when an investment is made through a Regional Center.

1. At-Risk Investment. The foreigner’s invested capital must be placed at risk. Thus, she must make an equity investment, not a loan, personal guarantee, or promise to pay. While she can place funds in escrow pending visa approval, those funds cannot be kept separate past approval.

Investments in Regional Centers are subjected additional rules. For example, to ensure that funds invested in a Regional Center are creating jobs, they only count toward investment eligibility thresholds if they’re held by the entities closest to the job creation. Thus, funds aren’t counted if held and used by a holding company (e.g., to satisfy start-up and administrative expenses, including attorney fees, administrative fees, and rent).

2. Threshold Amount. The standard threshold investment is $1.05 million, increased from the original threshold of $900,000, and decreased from its height of $1.8 million under regulations invalidated last year.

The threshold investment is reduced for “rural” and “targeted employment areas.” As of this March, the new threshold is $800,000, increased from the original threshold of $500,000, and decreased from its height of $900,000.

3. Legally Obtained Funds. This requirement is self-evident. Notably, USCIS may and often does request evidence to demonstrate the source of funds. Greater burdens of proof apply for funds from Iran and other countries of concern.

4. New Business. In fact, the reference to “new business” is highly misleading. Since 2009, foreigners have been able to invest in existing businesses. That is, unless the existing business was formed before 1990. Even then, investing in an existing business is permitted under common circumstances.

5. Active Involvement. Though not stated by legislation, USCIS rules hold that a “purely passive” investment is insufficient. However, those rules also reference the sufficiency of policy formulation. In fact, according to the USCIS Policy Manual, it’s enough for an investor to have the minimal rights, powers, and duties typical of a limited partner.

6. Job Creation. The target business must create 10 full-time jobs for 2.5 years after the visa is granted. To demonstrate that this will happen, a foreigner’s visa application must include a business plan showing how the job creation requirement will be met (e.g., market analysis, competitor comparisons, financial projections).

This is by far the most difficult hurdle of the program. Says business advisor and tax lawyer Roberto Santos, “The business plan needs to hit all the criteria they’re looking for. Preparing a good application is very much about process.”

Satisfying the job creation requirement is made far easier by investing through a Regional Center. In doing so, investors are permitted to count both direct and indirect jobs. That is, jobs created by a Regional Center’s suppliers and service providers are counted, whether or not they’re in the targeted geographic area. The job creation requirement is also significantly reduced for failing target businesses, though that’s typically far less attractive to immigrating investors.

Looking Forward

The last 14 months created great uncertainty for EB-5 applicants and would-be Regional Centers. But after the legislation passed in March, and with upcoming regulations, we now have significant clarity on the critical eligibility requirements of the program. No doubt we’ll see more and more immigrants interested in using this path to citizenship.

Notably, a leading immigration treatise observes that the U.S. tax structure is the “main disincentive” to use of the program. This separate article discusses how some foreign investors mitigate the impact of becoming subject to worldwide taxation.

Source: The Evolving Price of U.S. Citizenship

How a Canadian lawyer is helping the growing number of ultra-rich looking to exit China

Interesting profile of Canadian immigration lawyer David Lesperance who specializes in business immigration.
Remain unconvinced that governments can design investor immigration or citizenship programs for the ultra-rich that provide meaningful benefits to Canada and Canadians as both the previous federal program, Quebec’s current program and programs of other countries largely demonstrate:
When a Chinese-Canadian billionaire faced a closed-door trial last month, four years after being snatched from Hong Kong, the event did not go unnoticed among China’s wealthy entrepreneurs.
It was the latest sign that they could be next as Beijing pushes down on the country’s most affluent business people, says a Canadian lawyer whose unique practice focuses on building back-up plans for “ultra-high-net-worth” individuals.
That nervousness is fueling a growing and urgent interest in leaving mainland China or Hong Kong, says David Lesperance.

The number of very-rich business people based in the region contacting him for help in getting out has tripled in the last couple of years, he says, as President Xi Jinping consolidates power, eliminates opponents and tightens his grip on once-free-wheeling Hong Kong.

And they tend to be wealthier, often worth billions, people who had been entrenched where they were until recently.

“These are clients who realize the chances of getting caught have increased dramatically — to not a will but a when question,” said Lesperance. “That group has now for the first time really contemplated ‘I’m going to have to leave some day. There is definitely a wildfire.’”

“We’ve been very busy since the beginning of the year.”

The resulting flight of “golden geese” could be an economic boon for the countries where they land. Canada is definitely among the mix of possible destinations but governments here should do more to attract the rich fleeing China — and their fortunes, said the lawyer

But luring such migrants is not without controversy. Ottawa’s investor immigrant program was actually cancelled in 2014 because of what the then-Conservative government said were an array of problems. Those immigrants had to fork out a relatively tiny investment, paid less taxes here, on average, than nannies, spent little time in Canada, and often learned neither English or French, critics said.

So far, China has not seen a major exodus of its richest citizens. It’s still home to 626 billionaires, second only to the United States’ 724, according to Forbes.

But Lesperance is not the only advisor noticing a growing trend among China’s wealthy to move at least their money out of the country.

Increasing numbers are parking assets in Singapore via the city state’s “family office” system, according to a survey in March by CNBC. Jenga, one of the firms that handles such transfers, told the news outlet it had seen demand double in just the previous 12 months.

Lesperance seems to come by the work honestly, having been raised in an almost borderless environment himself. A native of Windsor, Ont., his father worked in the auto industry across the river in Detroit and two of his siblings were born in a hospital there, giving them instant dual citizenship

He says his practice — which combines immigration and taxation advice — is divided about equally between clients in China/Hong Kong, the Middle East and the United States. He’s now based in Poland, where he can fit clients from multiple time zones into his daily schedule.

Many of Saudi Arabia’s wealthy are worried about Crown Prince Mohammed bin Salman rising to the throne when his father, the king, dies. In the U.S., clients looking to decamp are divided between those who fear Democrats will boost taxes on the wealthy, and others who worry about a sharp shift to the right if the Republicans regain power nationally.

But the case of China highlights the dramatic changes Xi has wrought since coming to power in 2012, and the shifting role of business tycoons in the nominally Communist country.

Anxieties began with the 2019 proposal of an extradition treaty from Hong Kong to China, said Lesperance. It has increased as Beijing tightened the screws on Hong Kong, introducing a widely criticized National Security Law, imprisoning dissidents including media mogul Jimmy Lai and curbing the limited amount of democracy in the city’s government.

And there have been further scares on the mainland. Beijing recently quashed the thriving private-education industry and applied new pressure on the high-tech sector. Jack Ma, billionaire head of the Alibaba technology conglomerate, disappeared for months in 2020 and 2021 after he publicly criticized Chinese regulators, as an IPO for his Ant Group was suddenly axed.

Other moguls have also disappeared mysteriously. Xi’s announcement of a “common prosperity” program to more evenly spread wealth across the Chinese population has further put the very rich under pressure. Many China experts speculate that such campaigns are also about eliminating rivals to the Party’s — and Xi’s — power and control.

And then there is Xiao Jianhua, the Chinese born-and-bred Canadian citizen who was taken from his home in a Hong Kong hotel in 2017, surfacing just recently for a hasty, secretly held trial in China on unclear charges. His family in Toronto is still waiting to hear the verdict.

The case is “often cited” by clients who fear they could similarly run afoul of the government, said Lesperance. His bottom-line advice is that they prepare in advance for just that happening, rather than wait and see if things turn bad.

“You want to prevent the problem and avoid the wildfire, as opposed to trying to put it out after your house is on fire.”

Lesperance tells clients they must focus on moving both “ass and assets” — finding a place for their money and themselves and their family. That means deciding on a new home that works both “at the board table and the breakfast table,” somewhere the children can get a good education and the entrepreneur can keep running his or her business.

Popular destinations include Australia, New Zealand, the U.K., the U.S. and this country.

To get into Canada, those wealthy migrants can set up a subsidiary of their business here and obtain work permits as corporate transfers. Provincial “nominee” programs provide a pathway to permanent residence but they’re a “dog’s breakfast,” said Lesperance.

He recommends Ottawa revive the investor immigrant class, with reforms to address past issues. That could include requiring the person to provide a clear financial benefit to Canada, a system to weed out money launderers and other “undesirables,” strict application of tax laws, and imposing a large fee to cover the cost of processing those and other applications, the lawyer said. With all of it done in a clear, timely way.

“The thing to remember is that Canada is in competition for these Golden Geese and must present an opportunity which is competitive with all the other countries which are also trying to get this group.”

Source: How a Canadian lawyer is helping the growing number of ultra-rich looking to exit China

New Zealand launches new immigration visa category, opens from September | Mint

Higher threshold than most, along with focus on active not passive investment:

To attract experienced, high-value investors to invest in domestic businesses, the New Zealand government has created a new investor migrant visa category. The new Active Investor Plus visa category will replace the existing Investor 1 and Investor 2 visa categories. Eligibility criteria for New Zealand’s Active Investor Plus visa category includes a minimum $5 million investment and only 50% of that can be invested in listed equities.

“We have so many fantastic businesses in New Zealand that are making a real name for themselves in the global marketplace. Our Government has a goal to support these businesses to grow into even more successful global brands, and updating our investor visa settings is a key part of our strategy to attract high-value investors,” Economic and Regional Development Minister Stuart Nash said.

Source: New Zealand launches new immigration visa category, opens from September | Mint

Citizenship-by-Investment: Henley Global Citizens Report 2022 Q2 Press Release

Always interesting to see where the money is going. Canada is on the list for the start-up visa program, which is distinct from most of the other programs listed in terms of being based more on actual investment than just residence (but look forward to an eventual IRCC evaluation to see how effective it is):

“A tsunami of private capital has left Russia and Ukraine, the UK has lost its wealth hub crown, and the US is fading fast as a magnet for the world’s wealthy, with the UAE expected to overtake it by attracting the largest net inflows of millionaires globally in 2022, according to the latest Henley Global Citizens Report, which tracks private wealth and investment migration trends worldwide.

The Q2 report released today by international residence and citizenship by investment advisory firm Henley & Partners exclusively features the latest projected 2022 net inflows and outflows of US dollar millionaires (namely, the difference between the number of HNWIs who relocate to and the number who emigrate from a country) forecast by New World Wealth. The firm is the only known independent wealth research company systematically tracking international private wealth migration trends over the past decade. The HNWI migration figures focus only on people with wealth of USD 1 million or more and who have truly moved — namely, those who stay in their new country more than half of the year.

As expected, Russia has suffered the biggest emigration of millionaires over the past six months, with forecast net outflows of 15,000 by the end of 2022 — a massive 15% of its HNWI population and 9,500 more than in 2019, pre-pandemic. Russia’s invasion is in turn driving a steep spike in outgoing HNWIs from Ukraine, which is predicted to suffer its highest net loss in the country’s history — 2,800 millionaires (42% of its HNWI population) and a net loss of 2,400 more than 2019. No country-specific figures are available for 2020 and 2021 owing to Covid-related lockdowns and travel restrictions.

Top 10 countries gaining and losing millionaires in 2022

Forecast figures in the Henley Global Citizens Report show the top 10 countries in terms of net inflows of HNWIs in 2022 will be the UAE, Australia, Singapore, Israel, Switzerland, the US, Portugal, Greece, Canada, and New Zealand. Large numbers of millionaires are also expected to move to ‘the three Ms’: Malta, Mauritius, and Monaco. On the flip side, the 10 countries where the highest net outflows of HNWIs are predicted are Russia, China, India, Hong Kong, Ukraine, Brazil, the UK, Mexico, Saudi Arabia, and Indonesia.

Dr. Juerg Steffen, CEO of Henley & Partners, says HNWI migration was a rising trend over the past decade until, understandably, it dipped in 2020 and 2021 due to the Covid-19 pandemic. ‘The 2022 forecast reflects an extremely volatile environment worldwide. By the end of the year, 88,000 millionaires are expected to have relocated to new countries, 22,000 fewer than in 2019 when 110,000 moved. Next year, the largest millionaire migration flows on record are predicted — 125,000 — as affluent investors and their families earnestly prepare for the new post-Covid world, with an as yet-to-be revealed rearrangement of the global order, and the ever-present threat of climate change as a constant backdrop.’

Andrew Amoils, Head of Research at New World Wealth says HNWI migration figures are an excellent barometer for the health of an economy. ‘Affluent individuals are extremely mobile, and their movements can provide an early warning signal into future country trends. Countries that draw wealthy individuals and families to migrate to their shores tend to be robust, with low crime rates, competitive tax rates, and attractive business opportunities.’

UK and USA – the mighty are falling

According to the latest data, destinations that traditionally attracted wealthy investors are losing their luster. The UK, once touted as the world’s financial center, continues to see a steady loss of millionaires, with net outflows of 1,500 predicted for 2022. This trend began five years ago when the Brexit vote and rising taxes saw more HNWIs leaving the country than entering for the first time. The UK has suffered a total net loss of approximately 12,000 millionaires since 2017.

The appeal of another financial giant, the US, is also dwindling fast. America is notably less popular among migrating millionaires today than pre-Covid, perhaps owing in part to the threat of higher taxes. The country still attracts more HNWIs than it loses to emigration, with a net inflow of 1,500 projected for 2022, although this is a staggering 86% drop from 2019 levels, which saw a net inflow of 10,800 millionaires.

Commenting on the geopolitics of millionaire migration in the Henley Global Citizens Report, award-winning journalist Misha Glenny says private wealth growth is bound to remain anemic in the US this year as political unpredictability looms. ‘In November, the mid-term elections are likely to return a Republican House and possibly the Senate, too. With culture wars between Democrats and Republicans mounting once more with the leaked decision of the Supreme Court to overturn the Roe vs. Wade ruling on abortions, some fear we are entering another period of dramatic instability such as that which characterized the Trump years. As a consequence, some high-net-worth investors will doubtless think twice before committing their wealth to the Americas.’

The UAE’s stellar ascent as a wealth hub

By contrast, the UAE has become the focus of intense interest among affluent investors and is expected to see the highest net influx of HNWIs globally in 2022, with 4,000 forecast — a dramatic increase of 208% versus 2019’s net inflow of 1,300 and one of its largest on record. This mirrors the country’s remarkable rise in the Henley Passport Index rankings over the past decade as it focused on attracting tourism and trade by implementing a succession of mutually reciprocated visa waivers. The UAE is now doing the same with its competitive, agile approach to adapting immigration regulations to attract private wealth, capital, and talent.

Glenny says affluent Russians seeking to escape the impact of the devastating Western sanctions on their country have started to move to the UAE and Israel in large numbers. ‘An underlying pattern was already detectable in advance of the invasion of Ukraine. Well before the imposition of sanctions on the Russian banking system, there was a tsunami of capital leaving the country, largely prompted by the increasingly capricious governing style of President Vladimir Putin and his demands of loyalty made on middle-class and wealthy Russians. They have now come under further pressure from many Western countries, such as Britain, where they had previously made their homes.’

Israel, Australia, New Zealand, Singapore among the big winners 

As Glenny points out, net HNWI inflows are on the rise in Israel, with a figure of 2,500 forecast for 2022 — a significant increase of 79% since 2019.

Long-term high performer Australia consistently attracts large numbers of HNWIs. New World Wealth estimates that over 80,000 US dollar millionaires have moved to the country over the past 20 years. In 2022, the net inflow is expected to be 3,500 — the second-highest globally. Neighboring New Zealand is expected to receive a net inflow of 800 HNWIs in 2022, and Asia’s prime hub of affluence, Singapore, continues to attract millionaires, with net inflows of 2,800 expected — a prolific 87% increase compared to 2019’s figure of 1,500.

Commenting in the Henley Global Citizens Report, FutureMap founder and international bestselling author Dr. Parag Khanna says, ‘Globalization is not dead — and certainly not from the perspective of Asia, where inward capital flows are rising on the back of a post-Covid reopening and genuine investments across the region in productive capacity. With multiple factory floors, multi-trillion-dollar economies, rapid urbanization, a rising middle class, and surging technological penetration, Asia’s continued ascent remains the major economic story of our age.’

China, Hong Kong (SAR China), India, Brazil among the biggest losers 

Wealth emigration is beginning to hurt in China, with net outflows of 10,000 HNWIs expected in 2022. Amoils says, ‘General wealth growth in the country has been slowing over the past few years. As such, recent outflows of HNWIs may be more damaging than in the past. China’s deteriorating relationships with Australia and the US are also a major long-term concern.’

In Hong Kong (SAR China) HNWI departures continue albeit at a slower pace, with projected net millionaire outflows of 3,000 in 2022 (a 29% drop compared to 2019). Brazil’s millionaire exodus is intensifying with net outflows of 2,500 HNWIs predicted — up 79% compared to 2019. India is expected to suffer a net loss of approximately 8,000 HNWIs in 2022, up 14% since 2019 when the net loss was 7,000. However, India produces far more new millionaires than it loses to migration each year.

Commenting on wealth growth projections in the Henley Global Citizens Report, Prof. Trevor Williams, former Chief Economist at Lloyds Bank Commercial, says emerging economies are forecast to boom in the next decade. ‘As the world economy grows, economies in Africa, Latin America, and elsewhere in the Global South are catching up with high-income economies. And as this report shows, they will see a more significant number of millionaires and billionaires in the next decade. For example, the number of HNWIs in Sri Lanka is forecast to increase by 90% by 2031, while India and Mauritius’s millionaire growth is forecast at 80%, and China’s at 50%, compared to 20% in the USA and 10% in France, Germany, Italy, and the UK.’

Relentless uncertainty fuels demand for investment migration 

Henley & Partners received the highest number of investment migration program enquiries on record in the first quarter of 2022 — an increase of 55% compared to the previous quarter, which was itself record-breaking. The top four nationalities currently driving demand are Russians, Indians, Americans, and Brits, and for the first time ever, Ukrainians are in the top 10 globally.

The Portugal Golden Residence Permit Program remains the most popular program in 2022, followed by the St. Kitts and Nevis Citizenship by Investment Program. Next is Canada, with the Canada Start-Up Visa Program the fastest way for entrepreneurs and wealthy individuals to access Canadian residence and the North American market. Rising in popularity this year is the Greece Golden Visa Program, and last in the top five is the Antigua and Barbuda Citizenship by Investment Program.

Dominic Volek, Group Head of Private Clients at Henley & Partners, says historically, many wealthy individuals acquired residence rights or citizenship without moving to those countries. ‘Recent turmoil is causing this to shift — more investors are considering relocating their families to other countries for a range of reasons, from safety and security, to education and healthcare, to climate resilience and even crypto-friendliness. It is important to note that nine of the top ten countries for forecast net HNWI inflows in 2022 host formal investment migration programs, which encourage foreign direct investment in return for the right to reside or citizenship. Investors can now see the value of diversifying their domicile portfolios as the ultimate hedge against both regional and global volatility.’

The Henley Global Citizens Report also features regional insights by investment migration industry leaders representing seven key markets: the AmericasEurope and the UKAfrica, the Middle EastSouth AsiaEast Asia, and Southeast Asia and Oceania alongside expert commentaries by notable private wealth industry leaders such as Albert S. Yeo, President of BDO Private Bank Inc. (Philippines), Bijal Ajinkya, Partner in the Direct Tax, Private Client and Investment Funds Practices of Khaitan & Co (India), Yannick Archambault, Partner and National Leader of the KPMG Family Office in Canada, Matthias Ribback, who manages multi-asset portfolios for US clients of Vontobel Swiss Wealth Advisors AG, Murray Sarelius and Michelle Zhou from KPMG China, Ladi Runsewe, Founder and Chief Executive Officer of UR Family Office (UFO) in Nigeria, Ayuli Jemide, founder of DETAIL Commercial Solicitors (Nigeria), Tim Searle, Chairman of Globaleye (Dubai), and Giles Maynard, Senior Financial Advisor and Regional Manager at Carrick Wealth in South Africa.”

Source: Henley Global Citizens Report 2022 Q2