Agents have been submitting poor quality applications to IIP agency without proper due diligence checks, claimed the 2019 Oriip report.
The Oriip report has also called for sanctioning agents who blatantly submitting applications to Government without proper checks.
As per the report, 46 different Agents were engaged by the respective applicants in order to present these vetted applications. 67% of applications were covered by only 6 agents whereas the remaining 23% were covered by the remaining 40 agents. Only 17 agents whose applicants were all approved
The agents whose rejection rate was highest were those who had fewer applications. There were 6 Agents whose applications ended up all being rejected. When considering the most prolific agents (as mentioned above) the worst performer had 35.23% of rejections/withdrawals.
Rejected applications
Malta has the refused significant number of applications under the citizenship by investment program. Agents submitting poor applications also had led to the increase in refusal rates of Individual investor program. The refusal rate jumped to 33% from 25% in year 2018-19 compared to the previous year report highest of any year.
The number of refused applications stood at 115 (an average of 10 applications per month) for 2018 and 2019 (jun). Since the launch of the scheme in 2015, out of 1742 applications received, only 1198 approved applications.
The Oriip report recently published, claims
The recommendation for sanctioning agents was included in the 2016 and 2017 reports and was originally aimed at Agents who were presenting applications deemed to be of poor quality (to an extent that, at times, the documentation had to be returned in order to be reviewed properly).
Whilst the quality of applications has, throughout the years, improved, the ORiip has noted instances whereby some Agents presented applications in which it would have been clear – if proper preliminary due diligence checks had been properly carried out – that they were inherently ineligible (since the applicant and/or the dependants did not satisfy the related criteria).
Whilst there were never any risks that these applicants might have slipped through the MIIPA’s rigorous due diligence process (they were ultimately all rejected), one cannot fail but note that MIIPA staff would have to waste time and energy in order to process applications that were destined for rejection. In view of this, the ORiip recommends that, in cases where it is blatantly clear that the applications should not have even been presented, the Agents presenting them would be sanctioned accordingly
Agents are responsible for reasonable tier1 due diligence checks before proceeding with presenting their client’s application to the MIIPA.
During the requests for review of rejected applications, the Oriip could not believe their own eyes in reading through certain declarations/assertions made by agents. Some Agents have declared they found nothing irregular to report when even the simplest of checks should have at least rung a bell to them and stopped them from proceeding any further with their client’s application for citizenship, said the report
Comprehensive Tier 1 Due Diligence (DD) Checks
Tier 1 DD checks must be presented as part of the client’s residency application. They must consist of background checks (database and open-source checks) on all applicants and must be conducted in line with established industry standards and any applicable laws and regulations.
A comprehensive set of Tier 1 DD documentation needs to be presented together with a covering letter including:
• A confirmation that the agent has undertaken Tier 1 DD checks by industry best practices and any applicable laws and regulations;
• Confirmation of findings from any risk management database;
• Confirmation of the overall findings as a result of Tier 1 DD; and
• Declaration by the agent that he believes that the applicant is suitable to apply for Maltese citizenship.
It is also important to note that in case of PEPs or applicants showing on any sanctions or watch lists, the MIIPA must be immediately informed and provided with all the relevant details upon submission of a residency application.
IIP Agents
The total number of Accredited Agents as at the end of June 2019 is 134, a decrease of 25 when compared with the amount registered a year before. Of these, 21 were upgraded to the status of Approved Agents.
These 134 Accredited Agents were subdivided into four main categories, namely:
- Legal firms – 46
- Financial Fiduciary and Trust 55
- Management and Consultancy – 21
- Property Consultancy – 11
