Key Takeaways
- Prices to be set at minimum $200,000 increasing the current minimum by Jun 20, 2024.
- Bring an end to underselling and illegal discounting by agents.
- Higher transparency with disclosure of funds and audits.
- Common framework on governance and regulation of CIP’s establishing a regional authority.
- Regulating agents and promoting of schemes.
The Prime Ministers Antigua & Barbuda, the Commonwealth of Dominica, and Grenada have signed MOU with the Federation of St Kitts and Nevis, headed by OECS Chairman and SKN Prime Minister Dr. Drew, to implement harmonized standards for CBI programs, in a major shakeup of operating standards, with the exception of Saint Lucia .
St Kitts and Nevis CBI was the first country to increase minimum investment to US$250,000 effective from Jul 2023 and implemented strict regulations to strengthen the CBI, eliminating any illegal discounting and good governance.
The purpose of the Memorandum of Agreement is to provide a framework for cooperation and information sharing among the four OECS Member States in relation to their CBIPs., said the official press release of the SKN Government. The Memorandum of Agreement supplements the six principles agreed between all CBIP operating OECS Member States and the United States of America in March 2023.
Prime Minister Dr Drew has commented that “the four small island developing states who signed this Memorandum have committed to increase and harmonize the minimum investment threshold of their CBIPs to an investment sum of at least US$200,000 no later than June 30, 2024, and more importantly, to bring an end to ‘underselling’, a scourge on the CBI Industry in the recent past.
“This move will show the world that our four nations are responsible and serious about operating investment migration programmes that respect the rule of law, are sustainable and do not offend the interests of our brothers and sisters in the international community ”
Prime Minister Dr Drew.
Common Standards on Regulating CIPs
The Memorandum of Agreement, dated March 20, 2024, also sees the four nations agreeing to—
- share information on CBIP applicants;
- implement enhanced transparency measures such as the disclosure of funds received by CBIPs, the use of the proceeds of CBIs and to conduct independent financial and operational audits to assess CBIs compliance with best practice standards;
- assign or establish a regional competent authority to set standards in accordance with international requirements and best practices and to regulate the CBIPs;
- establish common standards to manage the communications and promotion of the CBIPs;
- establish common standards for the regulation of agents operating in the CBIPs; and
- facilitate joint training programs and capacity-building initiatives for their respective officials and agencies involved in the administration of CBIPs.
International Scrutiny
Caribbean CBIP’s in the OECS had become the target of international scrutiny between 2017 and 2022 during which there was a ‘race to the bottom’ with respect to investment options. Lately FATF, European Commission and UK authorities, and other several organizations have expressed concerns with deficiencies and several loopholes questioning vetting standards and corruption involved with citizenship by investment schemes, selling passports with no genuine link, changing names, money laundering and tax evasion.
Caribbean CIPs have come “under fire” with European Commission, implementing a visa waiver suspension mechanism for third countries with visa free access to EU citing internal security of Member States related to a third country nationals buying passports with lax checks. In 2023, Dominica and Vanuatu was slapped with visa waiver suspension from UK citing concerns with the CBI programs. The EU moved to revoke Vanuatu citizens visa free privileges. The Guardian revealed Five Caribbean states sold citizenship to 88,000 individuals from countries including Iran, Russia and China.
“We have countries within the visa-free regime with the EU that are selling passports/citizenships quite cheaply to people that are security risks or potential security risks to the EU.
Ylva Johansson, European Commissioner
IMF Audit
IMF has also complained about absence of manuals to record CBI revenue streams causing ambiguity in reports on balance of payments.
“The challenge for the compilers is how to classify contributions made under CBI programs that may be viewed as “outsized” payments compared to the cost of issuance of a passport or citizenship. “
IMF Report
IMF in its report said, Statistical manuals do not explicitly mention such programs or advise on how to record them. The challenge for the compilers is how to classify contributions made under CBI programs that may be viewed as “outsized” payments compared to the cost of issuance of a passport or citizenship. These challenges generate uncertainties as to whether to treat these contributions as taxes, services, or transfers, which in turn have different impacts on key macroeconomic variables.
“Lifeblood”
Small Caribbean countries have long argued CBI is a vital “lifeblood” creating significant macroeconomic impact by bringing key revenues in the absence of local economy and exports and tax revenue.
