The CBI industy have been rocked by underselling fraud, corruption scandals, political games that thas destroyed the reputation of the schemes in the Caribbean. The integrity of the CBI schemes is in question,only little has been hastily done to restore the confidence among international investors and stakeholders. Governments must implement serious measures to ensure a bright future for CBI programs. The EU, FATF, OECD and other organizations have expressed grave concerns of CBI programs citing tax evasion, money laundering and threats to visa free regime, due to lax checks on criminals and spies abusing the CBI programs.
We have extensively studied several reports and we propose the following measures urgently implemented to protect CBI schemes from abuse and plug the vulnerabilities associated with CIP. We will first highlight the vulnerabilities and then propose preventive measures (policy changes) in running a successful CBI program.
Adequate vetting and screening of applicants is key to a robust CBI programme.
Vulnerabilities
1.Identity Laundering
Identity laundering is a method by which individuals may acquire secondary or multiple
identities. In the CBI context, this can mean applicants could acquire a passport under a different name, or with information that is slightly different from their other identity documents, which may prevent database searches from identifying known derogatory information about that individual. Another tactic obtaining a new identity through poorly governed CBI programme and using the new and legitimate document to apply to a more reputable RBI programme. For example Iranian applicants can present a Turkish passport with altered name to apply for Greek/Portuguese golden visa program to circumvent sanctions or schengen visa procedure. If an illicit actor obtains a new identity via a CBI programme prior to committing an offence, this may enable the individual to keep their original identity unaffiliated with the crime. Even where a person’s biographical details such as name and date of birth stay the same, an undisclosed new citizenship enables an individual to create ambiguity around their identity, which can prove challenging to law enforcement.
Anonymity
CBI programmes that do not maintain a record of the applicants and their previous identifying information make it particularly difficult for financial institutions and law enforcement to link criminals to their new identities, especially when that individual has multiple citizenships and residencies. Illicit actors can seek further anonymity using an altered identity when identifying themselves as the ultimate beneficial owner of a complex corporate structure, which can present considerable difficulties for law enforcement in tracing assets and financial flows.
2.Family members Loophole
It is common for high-risk individuals to gift wealth to their spouse or other family members who will make the lead application, with the high-risk individual then applying as a family dependent (eg. PEP applicants) to circumvent due diligence process. All family members must be fully vetted without gaps.
3.Lack of Extradition
Criminals may be able to take advantage of countries offering CBI programmes and which do not extradite their own nationals. Once a person is ensconced with new citizenship or residency, the country which granted it may have difficulty removing that person, including for prosecution, even if it were inclined to do so.
4.Diplomatic Passports
Criminals or money launderers with the help of corrupt politicians can obtain diplomatic passports in CBI country present an opportunity with official or diplomatic post in the new country, which may come with certain privileges or immunities that place the person even further beyond the reach of law enforcement
5.Fugitive using False passport
A suspect, who was a fugitive for a fraud case in a foreign jurisdiction, obtained a
new false identity (passport, birth certificate, etc.) from another jurisdiction to
conceal his real name and to avoid arrest, and eventually used this false identity to
obtain citizenship through investment ( citizenship must be revoked).
Preventive Measures
Our Proposals
We propose the following policy changes to strengthen the CBI programs and protecting from abuse, in line with the FATF/OECD report.
Name Change – Jurisdictions could consider imposing a ban on changing of names used in CBI issued documents to include during the application process or after the issuing of the document. This would ensure that illicit actors are not utilizing programme to create new identities to conceal offending or evade capture. If name change permitted, CBI issued passports should be marked with all past changed names or aliases used by the individual in the passport observation or remarks page.
Fund Management – National funds that manage CBI inflows require clear frameworks of accountability, as well as having access to key information on CBI/RBI programmes, such as the number of applications approved, and the amount of revenues earned. Moreover, information about the use of CBI funds should be made publicly available at regular intervals and should also be subject to financial audits.
Visa Free Abuse – CBI passports allow visa‑required nationals to bypass the regular Schengen visa procedure creates security risk to EU borders, due to poor vetting checks enabling criminals, illicit people to abuse CBI schemes with weak security measures. Visa rejected persons by US, Canada, UK, Schengen countries must be viewed as security risk and should not be allowed to apply for CBI.
False Biometrics – Biometrics provided by application are prone to abuse and identity laundering without proper supervision. Biometrics must only be provided at consulates or at immigration office terminals.
Monitoring – After citizenship or residency is granted, jurisdictions should have systems in place to ensure participants are not misusing their new citizenship. This includes conducting a periodic review of applicants for changes in their risk profile to include warrants for arrest, sanctions listing, bankruptcy, etc
No Rush in Processing Applications – Agencies ensure that the application processing time is sufficient to allow for thorough background checks for atleast 4-6 months. Generally, governments or their designated agents check the information that applicants provide against criminal or national security databases, collect biometrics (such as fingerprints), and examine the applicant’s employment history and/or source of wealth.
Limited Time Discounts – CBI nations should also not offer time limited discount investment offers. This prevents sudden surges and ensures a focus on quality applications over volume. Discount sales also promote a “race to the bottom” for all countries in terms of value and standards. In the long term, this behaviour can harm all industry participants including those operating the sale.
Annual Cap on Passports – Jurisdictions could consider restricting issuing a substantial number of passports in exchange for investment. the volume of applications must be an annual cap. Application cap can ensure that case-working teams are not overwhelmed and put under pressure.
Interviews – Agencies should consider conducting in-person or virtual interviews to verify information, to test the credibility of submitted documents and gain accounts against adverse media
Multi Layered Approach – Creating a multi-tier vetting process to conduct CDD by a licensed Agent, the Agency and any third-party recipient of associated funds (i.e., financial institution, property developer etc) independently of each other helps verify customer identity using reliable, independent source documents, data, or information. Each layer should be explicitly required to independently screen applicants, and should not rely on screening already undertaken by other layers.
Disclosure of All Citizenship and Residence – Programmes should consider imposing a requirement to disclose all current and previous identities and nationalities imposed on applicants, so that if an applicant deliberately conceals additional identities this may be grounds to revoke any issued passport or visa and facilitate inter-agency and international
cooperation where necessary.
Crypto Payments – Cryptocurrencies make an easy conduit for ML and TF making it impossible to verify source of funds. This practice, paired with weak or non-existent AML/CFT requirements may offer cybercriminals, including money launderers, particular advantage in achieving greater anonymity and evading detection through dark web using legally altered aliases.
Low refusal rates – The refusal rates must be kept high to disqualify non-qualifying applicants . For example black mark candidates with, criminal record, visa rejection from UK/Schengen/US/Canada, sanctioned persons, wanted by law enforcement should be refused.
Genuine link – Passports must not be handed over without establishing genuine link. For example residence or personal visits, cultural and language ties also help. Antigua is the country in the caribbean that has 5 day personal visit requirement. They must visit Antigua & barbuda within 5 years to extend the validity of passport. Vanuatu is another country that has imposed personal visit for passport collection.
Document Forgery – In the past, applicants had been granted citizenship via CBI despite being listed in Interpol’s databases and that some applicants had presented forged documents (in particular forged clean criminal records) that the authorities failed to detect. Measures must be in place to detect forged birth certificate, passport and other identity documents duly certified by embassies and local authorities for international use. Law enforcement checks are an important part of the document vetting process. Applicant identification documents and criminal record certificates could be sent to local, regional, and international law enforcement authorities or embassy for additional verification. For example documents originating one country must be certified by local authorities for genuine and then superlegalised.
DDT Team – The creation of a Due Diligence Team (DDT) within the relevant competent authority provides for in house vetting and Due Diligence related case decision making capabilities. The team must be funded well and staff must be highly skilled and have required training to spot suspicious activity. This team can review statutory forms and supporting documentation for correctness, authenticity, and certification, interviews, where applicable, as well as evaluating wider DD products such as any reports provided by external due diligence providers. Aggregating and processing application documents through a risk matrix with a risk assessment report produced. conduct highly specialized training for staff to assist them in conducting in due diligence, audit and risk, or compliance.
Passport Endorsement – CBI programme documents will continue to be in circulation without the identifying markers. CBI passports could be marked as acquired through investment. A clear note in the document identifying that it has been obtained via a CBI programme on the front cover and either on the biodata page or the remarks page, could allow all regulated entities to establish that the document they are considering is a CBI issued document. This would allow financial institutions can apply appropriate due diligence to individuals that acquired CBI without subjecting all citizens from an issuing jurisdiction to unnecessary or unwarranted enhanced diligence.
Information sharing and cooperation – Mitigating corruption and integrity risk associated with CBI programmes requires also proactive efforts to improve inter-agency and international cooperation and information-sharing between government authorities domestically and across jurisdictions.
Real Estate Fraud – Real estate investments provide several risks for CBI/RBI programmes creating bogus investment schemes recycling money based on fraud, overselling and underselling by taking loans. For example property developers collected funds from investors but in return either left the project incomplete or did not begin work on the project at all. These projects exist only on paper, no real development takes place. Strict measures must be in place to prevent abuse, otherwise critical income to the nation and people will be swindled.
Revoked passports – Passport offices must have proper measures to duly collect revoked passports in validity. If not, public authorities, banks and private organzations in other countries do know know the validity of the document presented for identification. Such documents could be used to open bank account, companies and other setups . (only border police will be able to ascertain the authenticity of the document)
About World Citizenship Council
The World citizenship council (WCC) is a non profit startup for research, development and promotion of the citizenship/ residency schemes throughout the world. The Council brings together citizenship experts around the world. Membership is free of charge. CIP News is a founding member of WCC, part of Yellow network. For more information please visit https://worldcitizenshipcouncil.org
