Dominica has topped the comprehensive CBI Index as part of a special report into citizenship by investment by a leading international newspaper.
Caribbean nations stand out most among the 12 countries included, filling the top five positions in the last edition of Professional Wealth Management (PWM) – a publication from the London-based Financial Times.
After Dominica, which achieved a final score of 90%, is St Kitts and Nevis with 88%, Grenada (85%), Antigua and Barbuda (78%) and St Lucia (76% – tied with Vanuatu).
Cambodia is the lowest scoring nation, with 53% – just behind Austria’s 54%.
Scores are worked out based on what the CBI Index describes as ‘pillars’, which include freedom of movement, standard of living and minimum investment outlay.
Yuri Bender, financial journalist and editor-in-chief of PWM, said citizenship by investment (CBI) programmes can offer stability in an uncertain world – citing Brexit and the election of President Donald Trump.
The “fast-track routes to citizenship and second passports” are attracting a huge amount of interest among wealthy families, he said, in return “for major employment-creating investments in tourism, agriculture and infrastructure”.
The new normal?
Natacha Onawelho-Loren, head of legal, trust and fiduciary at the Salamanca Group in Geneva, told PWM that the rates of second citizenship will only become more common.
“Having more than one passport is already a fact of life for an increasing number of individuals and not only for the ultra-wealthy.”
The special report explores the “national empowerment through economic support” that CBI can bring.
St Kitts and Nevis is described as having a “remarkable growth story”, with the International Monetary Fund reporting that their CBI programme contributed to 12% of GDP.
It also “assisted the country in cutting its public debt from 159% of GDP – a figure recorded in 2010 – to 68%.”
And in Dominica, citizenship by investment emerged “as a lifeline in times of distress”, allowing the government to focus on “building a more resilient Dominica” following Tropical Storm Erika in 2015.
A similar story can be seen in Vanuatu, the PWN special report says.
While Dominica was “proactive” in establishing the programme, the Pacific island nation did so retroactively, launching it after being hit by Cyclone Pam in March 2015.
Such is the huge boost to national coffers, many countries are expected to follow the same path and offer residency to wealthy individuals, including Portugal and Italy.
“The trend will accelerate to attract those with capital, in need of stability or simply not wishing to be subjected to the whims of their own government,” added Onawelho-Loren.
The best programmes
According to the report, Dominica being placed at number one “echoes current trends in the economic citizenship market”, and that the Nature Island’s popularity has grown in tandem.
“St Kitts and Nevis took second place due to its reputation for integrity and trust but scored slightly lower due to a higher investment threshold.”
Grenada – which is a newer programme, launched in 2013 – is said to have “emerged from an unstable first year to become one of today’s most interesting citizenship by investment options, particularly following the implementation of reforms in 2015.”
“Considering the stability and longevity of the programmes in the Caribbean, it is no surprise that the Caribbean jurisdictions ranked in the CBI Index’s top five positions,” the report added.
Robust due diligence
St Kitts and Nevis was the first nation to implement citizenship by investment, enshrining it in its laws shortly after achieving independence. Austria passed its relevant nationality legislation one year later.
For almost a decade, citizenship by investment would not be employed by other countries, until the Commonwealth of Dominica launched its own programme.
In his introduction to the PWM special report, Bender addresses the more controversial aspect surrounding CBI, which detractors say are aimed “primarily at Russian, Chinese and Middle Eastern tycoons who have acquired assets in questionable circumstances” and are now looking to move.
But this ‘plan B’ is not uncommon – or shady – for people at that level.
“In reality, most oligarchs, magnates and politically exposed wealthy people know that they can easily fall out of favour with their government,” Bender writes.
“At one moment they can be perceived to be legitimate and are revered as entrepreneurs and wealth creators, and at another they are portrayed as an ‘enemy of the people’.”
Les Khan, CEO of the Citizenship by Investment Unit of the St Kitts and Nevis government, said: “The key is to have robust regulations and proper due diligence and vetting procedures so as not to allow individuals of ill repute to be able to get through.”
He stressed the importance of a sound financial system, with policies in place to ensure there are no opportunities for money laundering and terrorist financing.
St Kitts and Nevis and Dominica came out on top for their due diligence, alongside European archipelago Malta.
Fingerprinting and other biometric data was labelled “an important factor” when it comes to due diligence, and the best ranked countries have a system that includes “on the ground checks, plus assistance from international law enforcement agencies.”
The CBI Index is the brainchild of James McKay, a research analyst and consultant with more than a decade’s experience in the implementation and execution of complex research and data analysis projects.
McKay used guidance from the Organisation for Economic Co-operation and Development’s Handbook on Constructing Composite Indicators to create the first-ever comprehensive breakdown of CBI.
Of the seven pillars that make up the CBI Index scores, only two – freedom of movement, and standard of living – are topped by European countries.
This is largely due to visa-free travel, with the programmes in Austria and Malta allowing access to more than 170 countries.
Another factor is life expectancy in the European nations, with 81.6 years in Austria the highest of any states offering CBI.
Grenada also scores highly for expected years of schooling.
With the Caribbean nations dominating the rest of the ranking, there are some obvious differences.
In Malta, applicants must complete 12 months of residency. In Antigua and Barbuda, the requirement is physically residency of five days in five years after obtaining citizenship.
And while Comoros only asks for a minimum of US$45,000, Dominica and St Lucia (the lowest priced in the Caribbean) start from $100,000.
Although unlike St Lucia, which is currently embroiled in a scandal about how much ‘marketing agents’ take from the initial investment, Dominica does not pay commission.
Visit www.cbiindex.com to read the full report.