Why EU should not be anxious about Caribbean CBI

Investor immigration is a growing phenomenon, with more and more countries incorporating the concept in their laws. It takes the form of citizenship by investment (CBI), a process whereby persons make an economic contribution to a nation in exchange for citizenship, or residence by investment (RBI), a similar process where residence, rather than citizenship, is obtained in return for a monetary contribution.

In 2018 alone, three countries announced new CBI programmes. Of these, two – Moldova and Montenegro – are candidates for membership of the European Union (EU). Upon accession to the EU, they would join Bulgaria, Cyprus, and Malta in offering foreigners economic citizenship. CBI is also widespread in the Caribbean, where five jurisdictions, namely Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, and St Lucia, have all established CBI programmes. Indeed, St Kitts and Nevis is the birthplace of CBI, as legislators included provisions for acquiring citizenship in Part II, Section 3(5) of the 1984 Citizenship Act. Residence by investment is adopted across almost every developed nation, including, to name some examples, Canada, Portugal, Spain, the United Kingdom, and the United States.

Despite a clear recognition on the part of individual governments of the advantages of citizenship or residence by investment, regionally, the EU has begun to voice concern about the investor immigration programmes run by its member states. Most recently, in a Draft Report dated 9 November 2018, co-rapporteurs Jeppe Kofod and Luděk Niedermayer of the Special Committee on Financial Crimes, Tax Evasion, and Tax Avoidance (TAX3) called on member states to “phase out all existing CBI or RBI schemes as soon as possible,” and, in the meantime, urged them to ensure the carrying out of enhanced due diligence on applicants.

The concerns raised in the Draft Report with respect to CBI and RBI are EU-centred and turn primarily around the notion that persons who obtain CBI in an EU member state gain access to all other member states.

The Draft Report does not concern itself with CBI outside the EU, as persons who become citizens of non-EU countries generally do not have the right to live, work, or study in the EU. To do so, they must obtain visas and be evaluated by individual member states. One exception to this is short-term travel for purposes of tourism or business, for which many persons can rely on visa-free travel agreements. To what extent, therefore, should the EU be concerned by CBI in other nations, and, in particular, in the Caribbean?

Caribbean CBI countries perform enhanced due diligence on all their applicants for citizenship, in a process that goes beyond in-house background checks and extends to independent, specialised due diligence firms and both regional and international intergovernmental organisations. In a recent article by Heyrick Bond Gunning, CEO of S-RM – one of the firms authorised to perform due diligence on applicants for Caribbean CBI – Caribbean-mandated due diligence reports are characterised as ‘extensive,’ and as examples of what should be sought by “all CBI programmes that aspire to success and durability.” Mr Bond Gunning revealed that Caribbean due diligence reports include address verification (for both historical and current residences), passport verification, checks on police certificates provided by applicants (including on their authenticity), an evaluation of the applicant’s business profile (spanning from business interests to employment activity for the past decade), an assessment of whether business or employment-related entities are legitimate, and an appraisal of the applicant’s reputation (through online media, litigation searches, and contact with sources such as professional acquaintances, competitors, and industry bodies). Importantly, anti-money laundering (AML), counter-terrorism funding (CTF), and anti-bribery and corruption (ABC) checks are also performed, and applicants, their family members, and affiliates are examined against sanctions and wanted lists, as well as for political exposure.

CBI-related due diligence in the Caribbean is lengthy, taking around three months to conclude. By contrast, in its official website, the Government of the United Kingdom indicates that “You should get a decision on your [tourist] visa within 3 weeks.” Similarly, short-term Schengen Visas are also normally issued within weeks of an application.

Applicants for Schengen visas need only provide a handful of supporting documents, such as the relevant application form, recent photos, a valid, a roundtrip itinerary with reservations, travel health insurance, evidence of accommodation, proof of finances to support the applicant’s stay, and evidence of employment or student status. This should be juxtaposed with the broader documentary evidence required by the Caribbean.

In its official website, the Government of Dominica lists the following mandatory documents: forms, including a disclosure form, a fingerprint and photograph verification form, a medical questionnaire and certificate, the investment agreement, and a second application form; colour copies of all passports held, the applicant’s birth certificate, any marriage or dissolution of marriage certificate, driver’s licence, identity documents, any military and discharge documents, any name change documents, and any university or college diplomas; police records from the applicant’s country of birth, country of citizenship, country of residence, and any country in which the applicant has resided in the past 10 years; passport-size photos; proof of residential address; HIV test results and routine blood and urine test results; letters of professional reference and employment; 12 months bank statements; a notarised affidavit of source of funds; a detailed CV; a letter to the relevant Government Minister, and proof of payment of fees.

The due diligence process carried out in the Caribbean is all-encompassing, and goes significantly beyond the due diligence that is carried out by EU member states when determining whether to issue a short-term visa. Therefore, when Caribbean economic citizens enter the EU, they pose far less – if any – threat than persons who have not undergone CBI vetting, but rather have only submitted to standard EU short-term visa checks.