The US Department of State has published a 2019 report on citizenship by investment schemes (CBI/CIP) schemes.
According to the report, the year 2018 saw increasing scrutiny at the international level of economic citizenship programs, which are also vulnerable to money laundering activity and must be closely monitored and regulated to prevent their abuse by criminals. U.S. law enforcement remains highly concerned about the expansion of these programs due to the visa-free travel and ability to open bank accounts accorded to participating individuals; other vulnerabilities, as well as good practices in countermeasures, have been analyzed in the various 2018 studies and publications on the issue.
While Turkey eased its requirements for economic citizenship, St. Kitts and Nevis now uses a regional central clearing house under the auspices of the Caribbean Community to properly vet candidates. Antigua and Barbuda and St. Lucia have established their own vetting units.
The report excludes three countries: Malta, Grenada and Vanuatu.
1. Antigua and Barbuda
The Citizenship by Investment (CBI) Unit receives citizenship applications through local licensed agents. Agents must be citizens of Antigua and Barbuda, resident in-country for at least seven years, and hold a place of business in Antigua and Barbuda. The Money Laundering (Prevention) Act 1996 (MLPA) covers agents as financial institutions; therefore, agents are subject to AML obligations. Authorized representatives, based locally and abroad, market the CBI program and may be the first point of contact for applicants. Authorized representatives do not have the same citizenship and residency requirements as authorized agents.
Applicants for citizenship undergo a vetting process, including due diligence background checks. Citizens of Afghanistan, Iraq, Iran, Libya, North Korea, Sudan, and Yemen are not eligible unless they lawfully demonstrate their possession of permanent residency for at least ten years in the United Kingdom, the United States, Canada, the United Arab Emirates, New Zealand, Saudi Arabia, or Australia. Applicants must also demonstrate they no longer maintain economic ties with the restricted country.
Antigua and Barbuda has a MLAT and a Tax Information Exchange Agreement with the United States.
2. Cyprus
Cyprus’ investor citizenship program allows foreign investors to apply for Cypriot (and, accordingly, EU) citizenship after investing more than $2.2 million in Cyprus. This program generated $5.7 billion from 2008 to the end of 2017. The program requires investments in any combination of real estate, land development, and infrastructure projects; companies with a proven physical presence in Cyprus; or licensed financial assets of Cypriot companies.
Following pressure from the EC, Cyprus’ Council of Ministers decided in May 2018 to limit the number of naturalizations of investors to 700 per year as of 2018.
Cyprus screens applicants using a two-tier background check; applicants who make it to the second tier face a more extensive investigation, which takes up to six months to complete. Additionally, the Committee of Supervision and Control for the Cyprus Investment Program — which includes representatives from the Ministry of Finance, the Ministry of Interior, and the Cyprus Investment Promotion Agency (CIPA) — established in 2018 a Register of Service Practitioners. Those practitioners are authorized to provide residency/citizenship services to investors who meet certain criteria designed to increase accountability, such as abiding by a code of conduct, having no criminal record, etc.
3. Dominica
Under Dominica’s citizenship by investment (CBI) program, individuals can obtain citizenship through a donation to the government’s Economic Diversification Fund of U.S. $100,000 for an individual or U.S. $200,000 for a family of four, or through an investment in real estate valued at a minimum of U.S. $200,000. The real estate option incurs fees ranging from U.S. $25,000 to U.S. $70,000 depending on family size.
Authorized agents, based both domestically and abroad, market the CBI program and are typically the first point of contact for applicants. An application for economic citizenship must be made through a government-approved local agent and requires a fee for due diligence or background check purposes. There is no mandatory interview process; however, the government may require interviews in particular cases. Applicants must make a source of funds declaration and provide evidence supporting the declaration.
The government established a Citizenship by Investment Unit (CBIU) to manage the screening and application process.
Due diligence has been lax. Dominica does not consistently use available regional mechanisms, such as the Joint Regional Communications Center (JRCC), to properly vet candidates. The CBIU does not always deny citizenship to those who are red flagged or given negative dispositions from the JRCC and other institutions. There are also increasing concerns about the expansion of these programs due to the visa-free travel and the ability to open bank accounts accorded these individuals.
Dominica has KYC and STR regulations. The AML/CFT Code of Practice covers legal persons and provides for enhanced due diligence for PEPs. The registering agents of IBCs are mandated to keep proper beneficial ownership records.
Dominica has a MLAT with the United States. Dominica is a member of the CFATF, a FATF-style regional body.
4. St Kitts and Nevis
St. Kitts and Nevis is a federation composed of two islands in the Eastern Caribbean. Its economy is reliant on tourism and its economic citizenship program, and the jurisdiction has an offshore financial sector. Saint Kitts and Nevis is making progress in its AML regime.
An individual is eligible for economic citizenship with a minimum real estate investment of U.S. $200,000 or U.S. $400,000 for each main applicant, or through a U.S. $150,000 contribution to the Sustainable Growth Fund (SGF). The government uses SGF funds for economic diversification. Applicants must make a source of funds declaration and provide supporting evidence. International contractors conduct due diligence on applicants. Applicants also undergo vetting by the Joint Regional Communication Centre. Citizens of North Korea, Iran, and Afghanistan are prohibited from applying.
Saint Kitts and Nevis has KYC and STR regulations and enhanced due diligence for Politically exposed persons PEPs.
5. St Lucia
An individual can petition for St. Lucian citizenship through a minimum donation to the National Economic Fund of U.S. $100,000 per applicant, U.S. $165,000 for an applicant and spouse, or U.S. $190,000 for a family of up to four people. Other citizenship by investment options include a U.S. $300,000 minimum purchase in real estate; a U.S. $3.5 million investment for an individual, or U.S. $6 million for more than one applicant, in an approved enterprise project; or a government bond minimum purchase of U.S. $500,000 for an individual, U.S. $535,000 for an applicant and spouse, or U.S. $550,000 for a family of up to four people.
Applicants must apply through a government-approved local agent. An in-person interview is not required. Applicants must make a source of funds declaration and provide evidence supporting the declaration.
The government established a Citizenship by Investment Unit (CIU) to manage the screening and application process.
St. Lucia has KYC and STR regulations. It also has enhanced due diligence for PEPs. The Eastern Caribbean Central Bank regulates onshore commercial banks in St. Lucia.
There is an mutual legal assistance treaty (MLAT) between the governments of St. Lucia and the United States.
6. Turkey
Turkey eased the process for foreign investors to receive citizenship.
In September 2018,Turkey lowered the requirements for citizenship to a $500,000 investment, real estate purchase of $250,000, or the generation of jobs for at least 50 people.
The government also opened offices in Istanbul and Ankara to streamline the approval process for investors.
Read the full report here
