Transparency, tech and help after hurricanes: Expert talks Caribbean CBI in 2018

Last updated: 22 January 2018, 4:44 pm

Hurricane-hit Caribbean islands can benefit from citizenship by investment (CBI) programmes during 2018, an independent researcher has told WIC News.

And James McKay – head of McKay Research and with more than a decade of experience in complex data analysis – has urged those in the industry to look past the negative stories that have reported and focus on the good.

As an independent consultant based in London, McKay offers an impartial, detached view of the industry.

It was McKay who compiled the CBI Index that ran in a last summer’s special edition of Professional Wealth Management, a publication from the Financial Times.

The guide was the first-ever up-to-date, comprehensive breakdown of all the citizenship by investment programmes across the world.

But beyond citizenship as a commodity, McKay Research provides market intelligence and consultation across a wide range of sectors, and the founder has worked with some of the world’s biggest independent providers of strategic market research.

Speaking to WIC News, McKay said that said that the two hurricanes that devastated the Caribbean region in September 2017 – Irma and Maria – were “game changers” but moving forwards allow for “huge opportunities” in the citizenship by investment industry.”

There has been fears of a ‘race to the bottom’ as islands cut costs, with particular focus on the introduction of the cheaper Hurricane Relief Fund option in St Kitts and Nevis.

This temporary measure was designed to quickly build up the federation’s coffers in preparation for future natural disasters.



But despite “ad nauseam” negative publicity, the researcher believes the wake of severe hardship CBI schemes are being used for “ostensibly good” reasons.

“I had an opportunity to travel to the Caribbean in the wake of the earthquake in Haiti [in 2010], so I saw first-hand the devastation that these disasters can have on communities and towns that don’t have the infrastructure we’re used to here in the west.

“One thing that is not appreciated enough or understood is the human element behind the use of money raised [by citizenship by investment programmes].”

James McKay.

Forward-looking ways to use CBI funds are positive, McKay added, and should not be used for “political point scoring”.

Pre-hurricane priorities have been replaced by more urgent needs for funding, such as in Dominica. On Wednesday, Prime Minister Roosevelt Skerrit announced 1,100 jobs are to be created by his government, part-funded by the Nature Island’s CBI offering.

And following the USA’s withdrawal from the Paris climate accord, McKay believes that being able to “play an active role” in helping countries migrate against climate change is something “resonates with a lot of investors”.

‘Stringent’ requirements

Due diligence is the buzzword in citizenship consultancy, and different nations take different approaches.

The CBI Index described Caribbean nations as “leading the evolution” in due diligence beyond basic online checks, listing Dominica and St Kitts and Nevis as the best in the region.

“There is a lot of talk about due diligence issues in the Caribbean programmes which I find frankly a nonsense. Some of the European programmes have exactly the same issues – it is not something confined to the Caribbean by any means,” McKay said during his interview with WIC News.

For example Malta, McKay says, has really “been through the shredder” due to high-level corruption allegations.

“I studied the Caribbean programmes very closely and some of the requirements that they have are very stringent. The vast majority have tough checks in place. Anti-money laundering requirements, obviously, but also biometrical data, proof of funds, and a ban on several nationalities to prevent funds from coming from terrorism, et cetera.”

A positive move forward in 2018 is seeing nations’ CBI units continuing to partner with bodies that have international reputations in overseeing strict vetting.

“One thing I like to talk about is St Kitts’ involvement with the IPSA International [a regulatory risk mitigation company]. This is one thing that shows they’re really serious about having some kind of oversight about who they are dealing with and where funds are coming from.”



Transparency through technology

The previous year saw cryptocurrencies, in particular Bitcoin, reach mainstream attention across the world.

While volatility remains an issue for this very modern worldwide payment system, McKay considers incorporating technology into CBI programmes to be an important next step – in particular blockchains.

A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. By design, blockchains are inherently resistant to modification of the data.

“Lots has been made about blockchains and how that could be used. The whole point is that it is an electronic ledger, so the records are effectually share among all participants – the whole point is that it actually provides total transparency.

“Every transaction has to be confirmed by all those involved. That would be one way to show the world that [CBI units] are exploring of the more innovative technology to get on top of any corruption allegations.”

Caribbean unity?

The idea of a united front when it comes to the pricing Caribbean citizenship has long been mooted as a concept, but little headway has been made in turning it into reality.

For some, the ripples caused by Caribbean countries lowering their investment levels in 2017 mean that an agreement between nations is further apart.



McKay believes that countries made decisions last year to combat the “dire” situation they found themselves in – but there could be a coming together to prevent “competitive dissent”.

“[It’s] impossible to say whether it will happen this year. I think they have more pressing concerns giving what happened in last year but the mere fact that it has been mentioned is recognition that there is an obstacle that needs to be overcome.

“It’s in their mutual benefit and the Caribbean’s reputation to come to an agreement.”

James McKay is the founder and principal of McKay Research.

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