In recent months, there has been a significant reference to establishing harmonization amongst the five Caribbean Citizenship by Investment Programs (CIP’s). There can be no denying that the theory is sound but the practicalities of such a harmonization are much more difficult.

Each participating country is a sovereign state and therefore has the right to select its own applicants. However, greater oversight can be introduced and applied to strengthen the process which in turn will improve the image of the industry. The reputation of the CIP’s has been tarnished by media reports and appropriate steps need to be taken to demonstrate best practices are in place. These proposals may attract criticism, but they are being made in the overall best interests of the Caribbean CIP’s to ensure their long-term sustainability.

The two main areas of criticism have been focused on due diligence and the race to the bottom in terms of levels of investment, thus it is important to focus on these topics. Here are some recommendations:

1. Background Verification Report for all new clients (KYC) from agents

Due diligence (DD) is a multi-level process and begins with the approved marketing and local agents. Proper checks must be conducted by these firms before onboarding a client, so they understand the applicant’s background and can also determine if they are a Politically Exposed Person (PEP) or a high-risk applicant that could be considered a reputational risk to the country. If this is the case, a mandatory Background Verification Report (BVR) should be completed to ensure that all prudent steps have been taken to establish the client is worthy of consideration for citizenship in the country they have selected.

2. Citizenship by Investment Unit (CIU) to maintain Quality Assurance review of all agents’ case submissions

Each respective Unit should also keep a record of the quality of the applicants submitted by their approved agents to ensure that there is not a pattern of presenting borderline applicants. These can be reviewed when agents apply to renew their license.

Once the complete file is submitted to the CIU, internal DD checks will commence and the applicants details will be sent to a third party DD firm to conduct a detailed review. Concurrently, the applicant will be vetted by the Joint Regional Communications Center (JRCC) who will make international verifications. There are also provisions for applicants to be back checked by the US government to gain their agreement that the applicant is not inadmissible or a high risk.

3. Establish a CARICOM CIP Overview Committee

We propose that an additional step be applied for the benefit of the international community and CARICOM. We suggest that a CIP Overview Committee (CIPOC) be set up under the auspices of the OECS and the Investment Migration Council (IMC) and / or CARICOM with the responsibility to ensure that all DD verifications have been completed. This would comprise of the Unit submitting an executive summary of the application as well as the third-party DD report and the JRCC report. This necessary step will ensure that all files have undergone a thorough DD vetting and that no steps have been omitted. Although they are not deciding on the case, the CIPOC will be applying a quality control mechanism to support the integrity of the applications. Moreover, as applicants are applying to individual countries, it is still a CARICOM passport and, by applying such a step, CARICOM interests are also protected. We surmise that stakeholder nations such as the US, Canada, UK and the EU will welcome such a measure. It is necessary to demonstrate such best practices as to not risk further removal of visa free privileges to the region.

Critics of this will argue it will add further delays to the process. While this is true, they will not be significant as long as the CIPOC adheres to performance targets. As every file will have to go through this process, it will be the same for everyone, so no single country will have any advantage or disadvantage. Also, this takes place at the end of the process, so each CIU will continue to have its own processing procedures in place before it arrives at this stage.

Each CIU will also be expected to contribute funds to support the costs of CIPOC as well as commit to submitting quarterly reports to ensure there is parity between the citizenships they have approved and the applications they have submitted to CIPOC. The funding can be structured whereby each Unit contributes 10% (total 50%). The remaining 50% will be charged proportionally based on volumes of applications.

Such measures are critical for the Caribbean CIP’s to be sustainable in the long term and to maintain their integrity within the international community.

4. Provide post fact monitoring of applicants

It is also important to note that DD verifications only capture the background of an applicant for a specific period of time. While an applicant may have met all of the requirements at the time of approval, it is impossible to legislate for their behaviour afterwards. Provisions are in place to revoke citizenship if there is concrete evidence of misrepresentation on their application but afterwards they are citizens of their new country and have a right to their protection. This is no different to the US, Canada, UK etc, but matters are blown out of proportion if incidents arise when individuals are an economic citizen as opposed to a natural person.

As a further mechanism of protection, Due Diligence software exists to have ongoing monitoring of applicants. This way, if anything untoward happens after citizenship is granted, the CIU will be notified and can decide how to act. We submit that such software be installed at every CIU as an extra safeguard.

5. Common use of restricted nationalities

Another consideration would be to have a common list of restricted countries. Although this may not be well received in certain markets, such steps are critical to ensure consistent standards across the region as well as protection for its citizens.

6. Shared information on rejected applicants

Each CIU should share information on applicants who are refused so that they can identified at the front end if they try to apply in another program and not have to wait until it get to the JRCC stage. A common level of standards must be in place; if an applicant is rejected by one country he or she would automatically be ineligible for all other Caribbean CIPs.

7. Investment levels

There have been several reductions in costs associated with the CIP’s, with regards to the levels of contribution, real estate and government application fees. This is an area where there can be common agreement. For example, under the contribution model, we submit that the minimum floor should be USD $150,000. Other fees, such as DD and Government application fees can be at the discretion of the respective CIU, however there should be an understanding that these be quite consistent. If price and processing times are relatively the same, the applicant will be making choices on the individual merits of each member state.

The purpose of this opinion piece is to stimulate conversation and interest from the five respective CIP’s. There is a wonderful opportunity to discuss this in greater detail at the upcoming Invest Caribbean event in St Kitts in May, where the Heads of State and Heads of the CIU’s will be present, along with industry stakeholders, as well as the IMC Forum in Geneva in June. Such discussions and reviews are necessary to protect the greater good of the regional programs and ensure its long term sustainability.

Author: IMC