IIP has been running for just over four years, sits amongst the world’s best CIPs, and has put Malta squarely on the map, generating a global all-time-high interest among highly qualified applicants, who bring wealth, talent, exceptional skills contributing to the development of Malta.

An increasing number of HNW individuals are looking at investment migration in order to seek more favorable living conditions for their families and broaden their business prospects. Malta seized this opportunity and designed a robust citizenship-by-investment program that has brought added value to our county and enhanced an already thriving economy. The core objective of the IIP was never about money; rather it is about heightening Malta’s future prospects by attracting reputable high-net-worth individuals who can share their talent and business acumen to compliment the locals’ resourceful skills. Affluent individuals are looking at citizenship by investment options as a means of securing their future.

Malta is thus, an ideal destination  for HNWIs who hope for a better future and seek a superior quality of life with high standard of educational and medical services.

Due Diligence Process

CBI programmes have been around for 30 years, and this has allowed due diligence practitioners to learn a lot about risks and patterns in the industry. Particularly in the last ten years, the field has grown rapidly and significantly, and more and more aspects of it have been increasingly regulated. It is imperative to conduct proper customer due diligence on all applicants.

Citizenship-by-Investment Units (CIUs) employ very thorough and unparalleled due diligence systems, which are often looked-up to by their peers in the financial services industries. The benefits of the robust due diligence processes adopted by CIUs go beyond the investment migration industry. Maintaining the integrity of Malta’s economic citizenship programme is perhaps the greatest challenges faced by Malta.

The Malta due diligence process is the stringent in the world with vetting of applicants. Applicants who dont meet the eligible conditions or fail due diligence checks will be refused of citizenship. Malta has refusal rate of almost 25%, this also means that one in four applications is denied citizenship under the investment scheme

MIIPA developed a risk matrix aimed at structuring the due diligence process. Applicants of good repute who obtain Maltese citizenship through the IIP, enjoy visa-free travel to 182 countries.

The Due diligence process which has been developed and adopted by the Malta Individual Investor Programme Agency (MIIPA) has garnered several international positive reviews. This is the result of an open-minded approach and the continuous development of internal processes to ensure that only the rightful applicants make it through the programme. The programme is not about numbers, but more about quality and attracting talent who can prove to add value to the country. Every citizenship by investment application is thoroughly scrutinised by MIIPA before it receives approval, and then it is subject to further review from local banks in order for the applicant to be able to conduct banking services in Malta.

IIPA to keep advocating transparency and good governance of the programme and maintaining the integrity of the economic citizenship programme is the top priority for the agency.

Stages in MIIPA’s Due Diligence Process

The Malta IIP has a four-tier due diligence process, which is considered the most stringent, and of the highest standard, in the industry.

The first tier is the standard KYC due diligence done by both the IIP Unit and the Agent through databases such as World-Check.

The second level is the clearance obtained from the Police Authorities following thorough checks through a number of databases, such as Interpol, Europol and others. Any issues encountered at this stage are reported back to the IIP Unit. It has to be pointed out as well that to be able to visit Malta, Third Country Nationals (TCNs) have to go through the standard Schengen screening procedures.

The IIP team takes care of the third tier of due diligence. There are two stages at this level. The first is that of completeness and correctness of the application. This in itself would identify anomalies in the application form that highlight any potential risk. Every kind of accompanying documentation submitted to the IIP Unit is checked to ensure that it has been filled in correctly and that the documents are submitted in the proper format, correctly translated, and apostilled or notarised as the case may require. Where documents are missing or not in the correct format, or errors are identified, a request for submission is made to the agent representing the family applying for Maltese citizenshiup and the application process is paused until everything is in order. The second stage is that of a thorough and in-depth online due diligence check and verification of documents submitted. These checks involve checking with international databases for sanctioned individuals and companies. Searches are conducted on all the members of the family applying for citizenship, their corporate affiliations, any significant one-time transactions, donations, or inheritance, and any significant business partners or very close associates.

The fourth level is conducting outsourced due diligence. Two reports are commissioned from international companies on every family to ensure that as much ground as possible is covered and no stone remains unturned. These checks would include verification of all the information submitted, checks with databases, both international and local, in each of the family’s country of residence, and even discreet on the ground interviews with individuals who know the family.

As soon all these checks are done, another member of the due diligence team reviews all the information collected both internally and externally and puts all the pieces of the jigsaw puzzle together to prepare an internal memo. In cases where more clarity is required, the IIP Unit goes out with further questions to the applicant to ensure it has the right and proper picture of the family’s application. Where necessary, information is bounced back with the due diligence companies to ensure coherence.

Once all questions are answered, every application is first discussed internally within the IIP Due Diligence team. The team is composed of eight individuals from a banking and audit background, and who are trained in anti-money laundering regulations. Together, they share the information internally and corroborate the information gathered, which is then discussed again with the senior management team within the IIP Unit. If the team deems that more information or clarifications are required before a recommendation is made to the Minister, these are requested from the applicant. In some instances, another report is requested on specific areas of concern.

Finally, the senior management of the IIP takes a collective decision where a recommendation is prepared and submitted to the Minister responsible for Citizenship, with all supporting documentation of due diligence reports and findings. The Minister, together with the team, reviews the findings again upon which a final decision.

Anti-Money Laundering

Due diligence within MIIPA is taken very seriously. All employees working in the due diligence section go for an AML course to have a better understanding of what is expected of them. In addition, the employees within this section all have previous experience in either Risk and Compliance or Audit.

GDPR Regulations

The new EU GDPR rules on data protection will offer more protection and rights to EU Citizens. They will have more control over their personal information; getting easier access to their data, a new right to data portability, a clearer right to erasure (‘right to be forgotten’) and the right to know when their data has been hacked.  Sensitive personal information are to be encrypted to comply with the data protection rules.

IIP Risk Matrix

Malta developed the first CBI risk matrix to mitigate all the risks associated with CBI applications which goes beyond the source of funds and wealth. The MIIPA uses a structured due diligence process with a multitude of layers in order to gain access to information about the applicants. Sources include government agencies, law enforcement agencies and the private sector to obtain the necessary information which is then analysed and reviewed to mitigate the risks.

The due diligence process has evolved substantially during the past years. The IIP Unit has developed an internal risk matrix, which ensures that every application is being examined thoroughly in a consistent manner, and that decisions are taken systematically and transparently. The matrix has seven categories, and every application is treated similarly without deviations.

• Identification and verification is the first category of the risk matrix and looks at how the identity of the applicants has been established and verified, while considering all the countries the applicants have resided in over the ten years preceding the application.
• The second category looks at the Applicant’s business and corporate affiliations and takes into consideration ties with offshore activity, jurisdictions and industries.
•  A third category in itself is where applicants are politically exposed persons (PEPs) and are or have been on sanctions or watch lists.
• The fourth category of the risk matrix, which today constitutes of the most significant focus of the due diligence process, looks at establishing how the family have accumulated their wealth, and from where the funds for financing the application originate. The risk assessment under this category has an even stronger focus on documented evidence, at times delving into extremely granular detail such as bank statements, articles of association, share registers and certificates of incorporation, certified copies of contracts, and transactions amongst others.
• The applicants’ reputation constitutes the fifth category of the risk assessment matrix, taking into consideration the overall reputation observed through OSINT, reports and on-the-ground intelligence.
• We have established that the sixth category would focus on legal and regulatory matters with incremental risk factors based on any charges or convictions for criminal or civil offences, including fines at an incremental interval.

Relative Impact on the PAs Immediate Network

The six categories of risk mentioned so far are very commonly analysed within the financial sector. However, the seventh category is somewhat bespoke to the industry of CBI and consists of an analysis of the PAs activities and the relative impact on the PAs immediate network and society in general. This is to ensure that no stone is left unturned and to enable the team to cover any incidental area, which is deemed essential and was not covered by any of the other previous categories.

All information which is deemed necessary for the processing and due diligence of an application is required, and there is no room for negotiation or ad hoc decisions. Details of all applicants are also submitted to the Financial Intelligence and Analysis Unit (FIAU) for full transparency.Decisions within MIIPA are documented and substantiated with the required rationale, and signed off by the responsible person, to ensure transparency and accountability.