EU Voices Concerns; Vanuatu Promises Improved Due Diligence

Vanuatu’s two Citizenship by Investment Programmes, the Vanuatu Development Support Programme (VDSP) and the Vanuatu Contribution Programme (VCP), have become significant sources of revenue for the Pacific island-state. In 2018, the Programmes contributed around US$90 million to the Government’s reserves, and in June 2019, the Government had already collected approximately US$45 million from its economic citizens.

Despite the dramatic economic success of the two Programmes however, the processes adopted by Vanuatu in accepting candidates for citizenship have been raising eyebrows, particularly with respect to the due diligence performed by the Government on its prospective citizens.

Members of the EU Parliament, for example, have expressed concern that Vanuatu’s economic citizens are not properly vetted – despite being able to use their Ni Vanuatu citizenship to circumvent Schengen scrutiny procedures. This is because all holders of ordinary passports issued by Vanuatu may enter the Schengen Area without a visa for travels of up to 90 days within any 180-day period. Citizens of Vanuatu can also travel to the United Kingdom and its Crown dependencies for six months visa-free, and to the Republic of Ireland.

These concerns were recently acknowledged by the nation’s Minister of Foreign Affairs, Ralph Regenvanu, who promised the Government would embark on a review of its Programmes. In an interview with the Financial Times, Mr Regenvanu said: “We are getting some negative implications as a result of the lack of due diligence on applicants to get citizenships, which is affecting our bilateral relations with other countries,” further noting that Vanuatu would “stop some [Programme] aspects” and make “other aspects better.”

The Vanuatu Programmes contrast with those adopted in the Caribbean, where due diligence procedures are known to be stringent, and, consequenly, where visa-free and visa-on-arrival destinations for citizens are greater and on the increase. Caribbean nations review prospective citizens in-house through their purpose-trained Citizenship by Investment Units and through third party due diligence providers. These due diligence providers are of high repute, based in major partner nations such as the United Kingdom and the United States, and specialised in analysing family and business connections, criminal activity, reputation, and source of funds. International agencies such as Interpol are also consulted.

Mr Regenvanu said that the changes to the Programmes would be implemented before March 2020, when the Government of Prime Minister Charlot Salwai will face elections. It may be wise for the Salwai Government to mirror the Caribbean and mandate external due diligence reviews of their candidates, particularly from due diligence firms that are respected across the European Union, where anxiety about its two Citizenship by Investment Programmes seems to be at its highest.