Ireland: Universities received millions under golden visa scheme

2023/07/10 Leave a comment

Yet another example of a corrupt citizenship-by-investment scheme, along with a new wrinkle, university complicity. Scrapped earlier this year:

A pro-democracy organisation has criticised a ‘golden visa’ scheme in Ireland which benefited Irish universities as well as businesses and community projects to the tune of millions of euros over the past decade.

The Irish Universities Association had said it provided a lifeline of income to universities requiring urgent investment in facilities, but it is now being investigated by the Irish police for potential fraud.

Although the Immigrant Investor Programme (IIP) has officially ended, there are still decisions to be made on almost 1,500 applications – mostly from Chinese business people – which were lodged before the scheme closed.

The Committee for Freedom in Hong Kong Foundation accused the Irish government of selling residency for an ‘incredibly cheap’ price.

Mark Sabah, its director of EU advocacy, told the Business Postnewspaper that successful applicants were required to spend just one day in Ireland to qualify for residency, compared to up to 90 days in other countries with similar schemes.

The programme allowed 1,677 Chinese with at least €2 million (US$2.18 million) in personal wealth each to obtain residency rights since it was set up a decade ago.

Successful applicants were required to invest €1 million in an Irish business or to make a €500,000 philanthropic donation or a €400,000 donation in certain cases – and Irish universities were among the recipients.

The scheme was ended abruptly earlier this year because of growing concerns about money laundering and tax evasion.

Police investigate possibility of fraud

The Irish police are still investigating the possibility of fraud and if multiple Chinese investors obtained residency using the same money. Some 94% of the successful applicants were Chinese.

An audit carried out by the Department of Justice found that controls were insufficient and not applied effectively. Similar schemes across Europe have also been closed down, mainly because of security concerns and uncertainty over the origins of funds offered by individual applicants.

Ironically, the acting minister for justice who closed the scheme was Simon Harris who is also Minister for Higher Education. He held the justice portfolio while his colleague Helen McEntee was on maternity leave. He has since returned full time to the higher education ministry and is well aware of how universities benefited from the programme.

The Irish Times reported that Dublin City University received €4.4 million under the scheme, University of Galway secured €1.6 million in donations, while it is understood Trinity College Dublin also benefited significantly.

Peak body backed the scheme

The Irish Universities Association was among the various organisations that were asked for their views on the scheme before it was wound up. The association argued for its retention saying that it had enabled significant funding for third level institutions.

It said that with construction costs soaring, the programme provided a ‘lifeline’ for universities requiring urgent investment in facilities. It claimed that the process for considering and approving applications under the scheme was robust.

“IIP provides an immediate, positive impact on the quality of universities’ educational provision by investing in state-of-the-art, technology-enabled classrooms and spaces that facilitate project-based, production-oriented learning,” it said in its submission, which was recently released.

However, since the programme was scrapped, the association has not made any official comment, nor have individual universities.

Source: Universities received millions under golden visa scheme

Filed under Citizenship, citizenship-by-investment Tagged with

Common Issues With Citizenship By Investment Program

2023/06/24 Leave a comment

Interesting that this appeared in CEOWorld with other articles providing general advice on how to apply:

You don’t have to be an expert to realize the fundamental problems with citizenship through investment programs or ‘golden visas.’ A standard golden visa scheme or citizenship by investment program provides for permanent residence and, ultimately, citizenship in consideration of investments in the economy. These schemes provide for a fast-track application process and quicker resolution of issues. These schemes were uncommon during the 1980s when they were first introduced but are presently an attractive way to draw in investors.

However, as they say, all glitters are not gold. Such is also the case with these programs. These programs have been formally structured and are monitored under the necessary rules and regulations. Yet, they have attracted a lot of problems that are making it difficult for countries to back them up. The substantive operation (even procedural at times) of these programs remains in question, and we will explore what they are in today’s discussion. Let us see what problems these programs commonly face.

Is it ethical?

The most common allegations thrown in the way of these programs concern their ultimate outcome: they grant citizenship in exchange for money. If I were to argue from the side of the opponents, you are basically telling people that they can show their true allegiance to the country simply upon investing. Many hardened arguments come from those with very strong, conventional notions of citizenship and its role in maintaining and encouraging national pride and integrity. To them, these programs sell citizenship. Hence, there are many ethical concerns about these programs.

Poorly undertaken due diligence

Generally, these programs do not restrict applications from any foreign national. A country may place a few oversight measures on those coming from select countries. However, these restrictions are limited to very few countries. Even so, due diligence is nevertheless in place. That is, of course, not the problem. The problem lies in the way due diligence is carried out. High-risk profiles need to be filtered out, but many countries fail to do so. While documentary proofs have been mandated, they are not assessed as a standard procedure. To gain as much investment as possible, countries maintain opaque due diligence systems to bypass regular procedural requirements.

Encouraging corrupt activities

Approving high-risk profiles, providing channels to launder money across the globe, and encouraging corruption are major negative impacts of these programs. If we keep aside the arguments on the ‘sale of citizenship’, these programs can operate smoothly and properly, provided their implementation is done right.

For example, Hungary suspended its Golden Visa program after allegations that certain dubious companies were granted the right to sell residence bonds without a transparent procurement process. These companies reportedly amassed over $600 million during the course of 4 years. Why does this happen? There can be several reasons. For instance, lack of verification of the source of funds or limited information on how the investments are contributing to the economy.

Too lax requirements

Many Caribbean countries operate some of the world’s easy-to-access citizenship by investment. Dominica, Saint Lucia, and Antigua and Barbuda, for example, do not impose minimum residence requirements, require very low levels of investment, and offer ultra-fast processing time. While the idea behind these programs is indeed to grant citizenship through a faster and easier route of investment, these requirements invite more suspicion than approval. Why? The answer is obvious: these programs offer safe havens to criminals who run away to these countries to evade the criminal justice system. The evasion of tax is another example.

Source: Common Issues With Citizenship By Investment Program

Filed under Citizenship, citizenship-by-investment Tagged with

New Quebec Investor Immigration Program Details Met With Hesitation

2023/06/09 Leave a comment

Written from an immigration legal perspective and the comparison with other jurisdictions is of interest.

This is simply buying residency and later citizenship without any material contribution to the economy given the small amounts and passive investment approach and essentially is an implicit subsidy to investment dealers and trust companies. The amounts are ridiculously low in any case.

We know from the previous Quebec program that many who entered the program eventually left Quebec, often to British Columbia. We will see if the French language commitments during the first two years are tracked and enforced.

The upcoming relaunch of the Quebec Immigrant Investor Program (QIIP), known for its popularity as Canada’s leading business immigration program for the past two decades, is likely to raise some doubts among some foreign investors and others who are familiar with investor immigrant programs. Regulations for the program were just released. The revised program aims to attract investors by offering a passive investment immigration pathway without the requirement of establishing a business in Canada and actively managing it.

One notable change is the exclusive participation of regulated investment dealers and trust companies as financial intermediaries. This ensures investor confidence and provides a mechanism for agents to receive compensation. Additionally, the Quebec Government guarantees the investment, enabling financial intermediaries to arrange financing for applicants, further enhancing the appeal of the program.

The revised QIIP introduces several new requirements for the principal applicant. To be eligible, they must demonstrate a legally accumulated net worth of at least $ 1.5 million USD (C$ 2 million). Furthermore, the applicant must possess a high school (secondary) diploma and a minimum of two years of management experience within the five years preceding the application.

Once approved, the principal applicant will be required to make specific financial contributions. These include a $750,000 USD ($1 million CAD) five-year investment through an authorized financial intermediary, guaranteed by the Quebec Government. It is worth noting that financing options are available for this investment. In addition, a non-refundable contribution of $ 150,000 US ($200,000 CAD) to the Government of Quebec will be required.

Upon approval and completion of the financial contributions, the principal applicant and their family will be granted a temporary stay in Canada for three years. This temporary status allows the family members to work and study in Quebec, facilitating their integration into the local community. However, within the first two years of arriving in Quebec, the principal applicant must fulfill additional requirements. They must achieve a Level 7 out of 12 on the Echelle québécoise des niveaux de compétence en français, demonstrating their French language proficiency. Moreover, the applicant or their spouse must spend at least six months in Quebec, with an additional six months of residence required for either the applicant or the spouse.

Following the fulfillment of these requirements, the principal applicant and their dependents will receive Selection Certificates (CSQ), allowing them to apply for permanent residence from within Canada.

To summarize, the QIIP envisions an investment of roughly $ 750,000 U.S. refunded in five years interest-free. Details about financing such investments are not yet known but the speculation has been it will be about $375,000 U.S. as a one-time non-refundable payment consisting of the $ 150,000 US. to Quebec and the remainder being the cost of a loan to pay for the program. A big question related to the program will be the processing time for approval. Under the old program, it ran as long as five years although French speakers got through in about two years counting the provincial and federal processing that was required. The key impediments of the program for many investors are the French language requirement and the six months physical presence and one-year residence element to achieve unconditional permanent residence.

Comparison Programs:

Canadian Start-Up Visa Program

In contrast to the QIIP, the federal Canadian Start-Up Visa Program provides an alternative pathway to Canadian permanent residence. To be eligible, applicants must have a qualifying business and obtain a letter of support from a designated organization. They must also meet the language requirements, demonstrate proficiency in English or French, and have sufficient settlement funds. The program focuses on innovative businesses, allowing applicants to actively manage their ventures within Canada. Under that program investors normally pay somewhere between say $ 100,000 to $ 125,000 USD to make the necessary arrangements to be approved for permanent residence through a Canadian sponsoring organization that certifies the bona fides of the investor’s business plan. A key difference is that the Start-Up program requires the active involvement of the investor with an innovative new idea whereas the Quebec program is a passive program. However, judging by current processing times, the processing times for the Start-Up program and the Quebec program will likely be similar.

New Brunswick Program

Under the New Brunswick Provincial Nominee Program for investors you must be ready to invest under $95,000 USD (C$ 125,000) in a business for a period of not less than one year and the business has to have been established within two years of landing. To guarantee the investment is made a deposit of $ 57,000 USD (C$ 75,000) must be made with the provincial government which will be returned if the above conditions have been met. What is more, the investor must have a net worth of at least $ 225,000 USD (C$ 300,000).

Applicants are vetted by a point system used to assess them and must score 50 points to succeed. They must be between 22 and 55 years of age have sufficient English and or French language ability to actively manage a business in New Brunswick have, at a minimum, been awarded a high school diploma, and be willing to live and operate a business in New Brunswick. Applicants also must have management experience in three of the last five years. Applications must include a business plan that must be approved by an official of the Government of New Brunswick certifying the applicant has sufficient familiarity with the business climate in the province. Processing times will also be likely to be similar to the Quebec program.

The U.S. EB-5 Investor Immigration Program

The United States offers foreign investors its EB-5 investor immigration program which was created by the U.S. Congress in 1990 to attract investments and create jobs for American workers. In its most popular format, the EB-5 program enables foreign investors who invest $800,000 USD in a U.S. Citizenship and Immigration approved regional center commercial project for approximately five years to get a green card. The program is a relatively passive way for investors to gain permanent residence for themselves and their families and has an attractive concurrent filing feature that enables many investors to gain work and travel status inside the U.S. while awaiting the adjudication of their internally filed adjustment of status applications. In most instances, full processing to green card status is taking about four years, although Indian, Chinese, and Vietnamese applicants, are taking many years longer.

Conclusion

Ultimately, the choice of an investor immigration program depends on individual circumstances, including language proficiency, investment preferences, and long-term goals. However, the QIIP’s changes, particularly the French language requirement and temporary residency period, may deter some potential investors. As investors weigh their options, they will need to consider the various specific program requirements and their suitability for individual aspirations and objectives.

Source: New Quebec Investor Immigration Program Details Met With Hesitation

Filed under citizenship-by-investment, Immigration Tagged with , ,

Why ‘golden’ passports and visas shouldn’t be abolished, but made better

2023/04/14 Leave a comment

Somewhat self-serving from one of the leading citizenship-by-investment companies:

Armand Arton has eight passports.

It’s a collection fitting for the CEO (or as Arton prefers, “Chief Global Citizen”) of a firm that helps ultra-wealthy people purchase second citizenships.

The passport business boomed during the pandemic, especially among wealthy Americans who, for perhaps the first time in their lives, were barred from entering many countries around the world.

Now, as Europe reckons with housing crises, inflation, extreme weather, and war, governments from Portugal to Ireland are banning foreigners from purchasing so-called golden passports and visas.

“Golden passports,” formally known as citizenship by investment programs, allow foreigners to receive citizenship in exchange for investing a certain amount of money in a country, often by purchasing real estate. Their less-advantageous siblings, “golden visas,” provide temporary residence permits in exchange for investment, as opposed to permanent citizenship.

Europe’s recent crusade against the programs boils down to a single question threatening the foundation of the $20 billion industry: is it fair to sell citizenship?

Arton thinks so — and not only because it pays his salary.

The CEO, whose firm has helped attract over $4 billion in foreign investment to various countries in the last 5 years, was born in communist Bulgaria after his family fled the Armenian genocide. When he drove with his parents through over a dozen countries to their new jobs in Morocco, he learned younger than most how your place of birth determines the degree to which you can move freely throughout the world.

“We had to go and apply for 14 visas, and convince 14 governments that were not refugees,” he said. “It makes you feel inferior and threatened everywhere you go, just because of the passport that you hold, which is not your choice.”

A lost financial opportunity

At the Carlyle hotel in Manhattan’s Upper East Side, the CEO wears a blue blazer and beaded rope bracelets, signifying that he is one of those wealthy people who is, or would like to be perceived as, down-to-earth. While Dr. Christian H. Kälin, the chairman of rival firm Henley & Partners goes by the nickname “passport king,” Arton tells me he thinks of himself as the “Robinhood of passports.”

“The rich will anyways get from point A to point B,” he says, beginning his pitch. “So removing the price they have to pay, it’s a lost financial opportunity.”

Instead of banning golden passports and visas outright, countries should adjust their investment requirements to match the current economic landscape and financial needs, he says.

In February, Portugal announced it will stop accepting new applications to its golden visa program as part of a package to help alleviate the housing crisis. Last year, approximately half of Portuguese workers made less than €1,000  per month, with many residents facing eviction.

But while blaming wealthy foreigners for rising housing costs is an easy political win, Arton says, the country would be better served if Portugal funneled the $7.4 billion in foreign investment brought in through the program since 2012 into projects that benefit local residents, like affordable housing or refugee services.

“Portugal should have stopped and said, listen, real estate doesn’t work for us anymore. Let’s find something else that the country needs,” he told Insider.

Dr. Kristin Surak, an Associate Professor of Political Sociology at the London School of Economics and author of “The Golden Passport: Global Mobility for Millionaires,” says that while firms like Arton’s obviously have a financial interest in the programs continuing, the founder does make some fair points.

According to Surak, there aren’t enough golden visa recipients to destabilize the entire country’s housing market. Since the program’s inception in 2012, Portugal has issued 11,628 investor visas, equating to approximately 0.1% of the national population.

“I think there’s a little bit of racism, to be quite honest, in terms of the way these programs get blamed for different things,” she said, noting that most foreign property owners in Portugal are from EU countries like France and Sweden. Meanwhile, Chinese and Brazilian nationals make up the majority of the country’s golden visa recipients.

A golden tax

In a country like Syria, home to the world’s largest refugee crisis, Arton has clients that pay hundreds of thousands to millions of dollars to purchase second citizenship and fly away on their private jets.

The stark contrast between the migration opportunities for the elite and the impoverished prompted Arton to advocate for a Global Citizen Tax, a 1% to 5% tax on all investor citizenship and residence applications to be put toward the nation’s most pressing needs.

“For me, it’s something that I really want to be able to make an impact on a larger scale, not only for the guys in first class and private jets,” he said.

A scandalous history

But golden passports don’t only raise the issue of inequality, the European Commission argues, they also pose a threat to national security. Following Russia’s invasion of Ukraine, sanctioned oligarchs were accused of using the schemes to dodge sanctions. And in 2020, an Al Jazeera investigation found that Cyprus’ now-defunct program sold citizenship to criminals and political fugitives.

Arton believes national security concerns may have been the motivation behind Ireland’s recent program closure, which happened right around the time of the Chinese spy balloon scare. Last year, 282 of Ireland’s 306 golden visa applications came from Chinese citizens, The Irish Timesreported.

Arton said due-diligence for vetting applicants could use improvement, and is in favor of increasing industry regulation and data-sharing between nations. However, he argues that the odds are much greater that so-called “unsavory actors” enter a country via undocumented routes.

“If I’m a terrorist, if I’m really somebody that wants to threaten the security of the European Union, the last thing I’m going to do is apply through one of these programs,” he said.

Surak said that, by the numbers, golden visas and passports are neither national security nor money laundering issues, and said in her experience, investor migration tends to invoke moral outrage among people who already have strong passports and have never had to think strategically about immigration.

“Migration is always somehow fundamentally economic,” she said. “I think it’s complicated, which is not to say there aren’t problems with the programs. But I think there’s also a lot of hypocrisy and that the inequalities and power dynamics aren’t exactly what one expects.”

Source: Why ‘golden’ passports and visas shouldn’t be abolished, but made better

Filed under Citizenship, citizenship-by-investment Tagged with

Middle East: Trend for ‘golden visa’ schemes accelerating

2023/04/06 Leave a comment

Of note, a broadening of the market from high net-worth individuals and regions:

After the extremist group known as the “Islamic State” took over parts of her own country in 2014, Iraqi journalist Hiba Ahmad started looking for an escape route.

“I just thought I needed a place outside Iraq, to be safe,” she told DW. “So if there is a difficult situation in Iraq, I can leave.”

After investigating online, the Baghdad native decided to buy a small apartment in Turkeyand found one she liked for around $40,000 (€36,840), near a small seaside resort about an hour from Istanbul. The “Islamic State” group was defeated in 2017, but she still comes here regularly.

“The reason I come now is because it’s very hot in summer in Baghdad,” Ahmad explained. “It’s calm and peaceful and I stay for two or three months.”

Although Turkey recently tightened residency rules, Ahmad is able to do this because she bought the Turkish apartment. This allows her to regularly renew a two-year visa. Without the real estate investment, she would only get a tourist visa for a month, she explained. Eventually, if she wanted to, Ahmad could even apply for Turkish citizenship.

Golden immigration opportunities

Ahmad’s Turkish visa is just one of the milder and more affordable examples of what are known as residency by investment (RBI) schemes, often colloquially known as “golden visa” programs. There are also citizenship by investment or “golden passport” schemes but these usually require a lot more money, paperwork and time.

In the Middle East, the motivations for both versions of these schemes are the same. Countries offering golden visas or golden passports want to encourage investment and top up foreign currency deposits. For the individuals who participate in them, these schemes can provide them with better lifestyle options, a second passport that offers more travel possibilities and the chance to escape political problems, economic turmoil or conflict back home.

Canada, the US, Ireland and other EU states have all had these schemes too. But it’s only been in the past five years or so that the idea has gained popularity in the Middle East.

Early in March, Egypt made it even easier for foreigners to become Egyptian via investment. The country has had a citizenship by investment, or CBI, plan in place since 2020 but, because of its economic struggles and the need for more international investment and foreign currency, the country relaxed the terms this year.

The United Arab Emirates has had a golden visa scheme since 2019 but overhauled it in 2022, making it cheaper and easier to access.

Since 2018, Jordan has had a CBI scheme and in 2020, Qatar began offering a longer, temporary residency in exchange for real estate ownership. Bahrain has had a “golden visa residency” program since 2022 and introduced a “golden license” for large-scale investments this month. And Saudi Arabia launched a “premium residency” scheme this year.

Europe phasing ‘golden visas’ out

“The trend in the Middle East is the reverse of what we are seeing in Europe,” said Jelena Dzankic, a professor at the European University Institute in Italy and co-director of the Global Citizenship Observatory. Dzankic is referring to the fact that in Europe, the golden passport and residency schemes offered by the likes of Portugal, Greece and Cyprus are now being phased out.

In Europe there’s been “progressive abolition of citizenship and residence by investment, due to scandals linked to the scheme and the risks associated with them,” Dzankic explained.

Critics often describe such schemes as nations selling citizenship to the highest bidder, arguing they open the country up to potential security issues, inflated real estate prices and the risk of corruption and money laundering. After the outbreak of war in Ukraine, the EU urged all member states to scrap such schemes for fear they would help sanctions dodgers.

“So I would assume that as one market — the European one — has become inaccessible, people have started to look into viable alternatives,” Dzankic said.

Fast track to citizenship

The modern idea of citizenship by investment dates back to the 1980s.

According to the Switzerland-based Investment Migration Council, or IMC, an umbrella organization for companies involved in the sector, the first CBI program was established in Tonga in 1982, the next by St. Kitts and Nevis in 1984. Small island states, struggling in the aftermath of colonialism, were able to raise funds by offering citizenship or residency in exchange for investment.

Today, most countries offer some sort of route for investors to eventually gain citizenship. But it’s important to differentiate between this and the frequently debated RBI or CBI schemes currently offered in one form or another by around 80 countries, according to the IMC.

In return for substantial investment, these offer either citizenship or residency almost immediately, or via a fast track. Required investments range from about $100,000 in the Caribbean to up to $3.25 million (€2.96 million) in Europe. Some of the schemes require investors to be in the country for a certain amount of days or to set up businesses, while others don’t even need them to visit.

As Dzankic, who has been studying this sector for over a decade, told DW, “a citizenship industry” has grown up around this and often companies involved will also lobby national authorities to introduce more benefits.

Sector observers have said it’s not just Middle Eastern governments that are paying more attention to RBI and CBI schemes. Locals in those countries, especially wealthier individuals in countries experiencing conflict or economic turmoil, such as Lebanon, Iraq, Libya and Syria, are also taking advantage of such schemes abroad.

Who applies for ‘golden visas’?

It is hard to find exact numbers on who is applying for golden passports or visas, or how many there are. State schemes tend to be opaque or slow to publish statistics.

“While there is no definitive data on the exact nationalities of Middle Eastern investors participating in these programs, there are a few patterns,” David Regueiro, a regional representative for the Investment Migration Council, told DW.

For one thing, Middle Eastern investors “are some of the most active consumers of these programs in the world,” he said, with some countries getting over three-quarters of all their applicants for CBI schemes from the region.

“In terms of specific nationalities, investors from countries such as Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, Lebanon, Syria and Iran are among the most active,” Regueiro added.

Most of the immigrant investors are wealthy with a net worth of somewhere between $2 million to $10 million. But around a quarter of them have less than that, the immigration consultant noted. “So while it’s true that wealthy individuals have been among the most active investors, middle-income earners are also showing more interest,” said Regueiro.

It’s also possible that the less expensive and more accessible such schemes get — such as Egypt’s CBI program or Turkey’s real estate-for-residency plan — and the more difficult circumstances become at home because of things like an economic downturn or climate change, the more that non-millionaires will also consider this kind of move.

“You have a lot of people who can’t afford traditional CBI programs,” said Jeremy Savory, head of the Dubai-based immigration consultancy Savory & Partners. “Maybe there’s a gap in the market for some that start at $50,000, with relevant benefits,” he speculated.

Uncertain future

Whether the programs in the Middle East are more successful than those that came before them remains to be seen, the experts said.

Regueiro believes more new programs will continue to emerge in the Middle East. But, he suggested, “another trend we may see is an increase in the level of scrutiny applied to these programs.”

“The very simple answer is compliance and trust in the process,” Savory argued, arguing that some schemes, such as those in the Caribbean, had been running for decades because they were considered more trustworthy.

“The Middle East is still a young market in this context so what happens with these programs depends on a number of issues,” said Dzankic. That includes how demand develops and how what she calls the “citizenship industry” reacts. While EU countries have been regulated by member states, no such supervision exists in the Middle East.

“So pressures related to democracy and good governance might be less,” she said. “Over time, other concerns may arise out of these programs.”

For example, late last year the EU stopped allowing citizens of Vanuatu visa-free entry into Europe because of concerns about the Pacific country’s loosely regulated CBI scheme. “Then it depends on how states deal with them,” said Dzankic.

Source: Middle East: Trend for ‘golden visa’ schemes accelerating

Filed under Citizenship, citizenship-by-investment Tagged with , ,

Henley & Partners, Leader In Controversial ‘Golden Passports,’ Sets Sights On U.S.’s Ultra Rich

2023/02/17 Leave a comment

Of note:

Henley & Partners, the U.K.-based consultancy, has become the most prominent facilitator of so-called “golden passport” and “golden visa” schemes for the ultra-rich after decades of securing passports for the wealthy in Russia, India, China and more. Now it’s turning to the U.S. as its next major market, boasting an unprecedented uptick in the number of high net worth Americans seeking second citizenship.

Migration investment schemes, which effectively allow people to purchase citizenship or residency in exchange for an investment in a country, have long been controversial but came under a harsh new light after Russia’s February 2022 invasion of Ukraine. Forbesfound that nearly half of 35 sanctioned billionaires had a second (or even third) passport, including through European investment migration schemes. Many of the most prominent citizens by investment schemes have since moved to halt sales to Russian applicants, revoke passports or shut down altogether—including most recently Ireland, which announced abruptly on Tuesday it was shutting down its decades-old scheme. Portugal’s program, which has been one of the most lucrative for Henley & Partners, is currently being reviewed by its government.

Despite the crackdowns in Europe, Henley & Partners says business is better than ever—and not for the reasons many may expect. On Wednesday, at a glitzy private luncheon at the Lotte New York Palace, a five-star hotel in Manhattan, the firm’s leaders, including CEO Juerg Steffen, touted the record number of inquiries and applications received by Henley & Partners in 2022, with the highest number coming from a somewhat surprising market—the U.S.—which Steffen claims is about 20% of the firm’s citizenship investment business in 2022, followed by India.

Overall, Henley & Partners’ business grew 25% last year, and another 35% the year before, Steffen told Forbes in an interview before the event. The company would not share revenues for “competitive reasons” but it takes a cut out of every visa or citizenship application, with higher charges for applications with multiple people (70% of applicants are families). The migration firm also runs a government consultancy business advising countries on how to start and run investment migration programs, which Stefan said makes up about one third of the group’s total business. The firm saysit helped set up “many” of the 30 residence and/or citizenship programs it facilitates, such as St. Kitts & Nevis, which it helped relaunch starting in 2006. Steffen claims the investment migration industry is now worth some $30 billion, including the amount invested, though others have pegged it closer to $3 billion.

According to a “USA Wealth Report” published in conjunction with the event, the number of Americans making inquiries to Henley & Partners about citizenship investment and residency options has increased more than four fold since 2019 (the company did not share exact numbers for either data point). The firm claimed it received more inquiries from wealthy Americans than any other nationality last year. That includes Russians and Chinese, though the former is likely explained by many of these programs halting Russian applicants, and the latter by China’s strict coronavirus-related travel restrictions; Steffen said there has been an uptick in interest from wealthy Chinese since the country’s borders reopened in January.

To accommodate the new levels of interest, Henley & Partners announced the opening of three U.S, offices in New York, Los Angeles and Miami. Steffen also said the company is planning to expand its workforce from 300 to 400 people by the end of the year. Previously, the company’s office in Canada handled all inquiries from Americans. One employee of the newly formed New York office said it is already working with 200 clients.

As for why wealthy Americans would be interested in getting another passport, Steffen claims that a number of U.S. billionaires started approaching Henley & Partners after the start of the Covid-19 pandemic. “From our perspective it has probably to do with the political environment but also how the government handled Covid at the beginning. They realized, we have a private jet but we can’t just leave and go to another country even if it’s perhaps more secure. Then they realized how important it is to have more than one residence and citizenship,” he said.

But the U.S. is politically and economically stable relative to some of the countries where Americans are reportedly seeking access. According to the report, the most sought after programs among Americans were Portugal’s Golden Residence Permit Program, which requires a minimum real estate investment of nearly $300,000 and can take up to 18 months to process, followed by Malta’s, a program that requires its applicants to live in the country for 36 months and make a minimum investment of about $790,000. Also commonly pursued was Caribbean citizenship through St. Kitts & Nevis, which requires a significantly smaller $125,000 investment and can take less than half a year, according to the firm.

Critics have long pointed to the schemes as a vessel for potential corruption, money laundering and tax avoidance. “We consider that the sale of citizenship through ‘golden passports’ is illegal under EU law and poses serious risks to our security,” Didier Reynders, the European Commission’s commissioner for justice and consumers, saidlast March as the commission escalated its campaign against citizenship by investment schemes by calling an end to the programs.

In an April 2022 interview with Forbes, ” Eka Rostomashavili of the anti-corruption watchdog Transparency International acknowledged that while there are “legitimate reasons for wanting to have a second passport,” she argued. Many wealthy Russians sanctioned for their connections to the Kremlin have EU passports “because they probably don’t want to live in the mess that they helped create.”

As the biggest player in the investment migration industry, Henley & Partners has landed in the hot seat more than once in recent years after a slew of reports raised questions about some of people it has helped get passports. The Organized Crime and Corruption Reporting Project (OCCRP) published a report in March 2022 detailing how the firm helped a “bevy of high-risk clients” gain citizenship, including some individuals with questionable backgrounds who were later sanctioned or convicted of crimes.

Henley & Partners has repeatedly responded to these allegations asserting it follows all local and international laws and regulations. In his interview with Forbes, Steffen echoed these points, saying that while the industry is largely unregulated, Henley & Partners follows an extensive due diligence process that involves looking at a person’s criminal record from everywhere they’ve lived in the past 10 years and consulting with external investigative companies that write reports ranging from 30 to 70 pages on each potential client. “For us, it’s of course, very important from a reputational perspective,” said Steffen. He said that it took a year to move through all the regulatory hurdles required to start its business in the U.S.

Whether the demand is as high as it claims, moving into the U.S. market seems to offer another important benefit to Henley & Partners, which is a shot at building legitimacy for an industry that has been delivered significant blows over the past year. Steffen says he isn’t worried. While some programs have tightened their application criteria or even closed, he said the firm has been conversing with many new governments open to launching programs. “It’s getting mainstream and most of the countries actually have these programs now,” said Steffen.

Source: Henley & Partners, Leader In Controversial ‘Golden Passports,’ Sets Sights On U.S.’s Ultra Rich

Filed under Citizenship, citizenship-by-investment Tagged with ,

Cyprus so far strips 222 people of ‘golden passports’

2023/01/20 Leave a comment

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’

Filed under Citizenship, citizenship-by-investment Tagged with

The world’s most powerful passport for 2023 revealed

2023/01/12 Leave a comment

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

Filed under Citizenship, citizenship-by-investment Tagged with ,

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

2022/12/05 Leave a comment

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

Filed under Birthright Citizenship, Citizenship, citizenship-by-investment Tagged with ,

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

2022/10/18 Leave a comment

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

Filed under Citizenship, citizenship-by-investment Tagged with

← Older posts

Newer posts →