Investment Migration Council

Author: Alpesh Patel

  • Earn Your Stripes: How Investor Migrants Should Contribute To Their New Nation

    Earn Your Stripes: How Investor Migrants Should Contribute To Their New Nation

    “Don’t it always seem to go / That you don’t know what you’ve got till it’s gone.”

    Joni Mitchell, arch-priestess of the hippy movement, might have been singing about the environment but, somewhat ironically, her words ring true for capitalism – and its cousin, globalisation.

    These two forces have done much more than shape the modern world – they have proven more effective at combatting the four horsemen of the apocalypse than any other system of government or economics.

    We live in a time of unprecedented global peace, a new Pax Romana where conflicts are more often resolved through sanctions than kinetic warfare. The private sector has been far more successful than nation states at eradicating diseases like polio and malaria (witness the work of the Bill & Melinda Gates Foundation, for example). Meanwhile, the number of people living in poverty more than halved between 1990 and 2013 thanks largely to the greater opportunities provided by the world economy, while private organisations are helping to eliminating hunger through, among other means, biotechnology.

    None of these achievements would have been possible – and certainly not on this scale – if it weren’t easy for people and money to cross international borders easily, and for wealthy people to invest their money where they see fit. So why are we hamstringing the free movement that is so central to world development, and threatening to make globalisation a mere memory of happier, more prosperous times?

    Unfair migration policies

    Current migration policies worldwide do not effectively support the movement of people and money that is so crucial for achieving the results that benefit the world’s poor, hungry, and economically-disadvantaged.

    One’s ability to take up citizenship in a new country should depend on the good that you intend to do, not on the opposite, or whether your country of origin has cosy political relations with your intended destination.

    Yet all too often, that’s how investment migration is perceived. It’s either used as a political pawn in a tit-for-tat diplomatic dispute, or the wider public consider the system unfairly benefiting oligarchs or kleptocrats, who can become citizens or residents with few or no questions asked about their background.

    Nothing could be further from the truth. Take Roman Abramovich for example. Even someone with such a high profile, who impacts the local economy (in Chelsea), was delayed in his application as the UK followed its due diligence process to the letter.

    Some nationalities are more equal than others

    In today’s globalised world, the idea that your country of origin should decide your access to basic human rights – such as travel between two countries, the ability to migrate, or to invest your money where you choose – is anathema to all right-thinking people.

    If we want migration to benefit large numbers of people and support the great things that capitalism can achieve, we need to make decisions based on the good that these people do – much in the same way that President Macron gave citizenship to Mamoudou Gassama following his daring rescue of a toddler in Paris a few weeks ago.

    A new model for investment migration

    We think it is time to re-think our approach to the migration of high-net worth individuals. People should not be judged on where they come from, but rather by what they plan to do with their money when they arrive.

    In the UK, the Tier 1 Investment Visas enables anyone with £2 million to acquire citizenship or residency as long as they invest that money in British businesses or Government bonds. Other countries have similar programmes, to the extent that citizenship – and resident-by-investment – is a multi-billion-dollar global industry.

    By setting out and enforcing strict self-regulatory rules and codes of conduct for investment migration, every country can ensure that when people move themselves and their money, it does the maximum amount of good for the people of that nation. Ensuring that this cash goes into the local economy, it helps to create jobs, sustain start-up businesses, and improve productivity – all the things that globalisation achieves when it’s working properly.

    The battle for all who believe in capitalism and free movement is to convince others of the benefits that these migrants bring. It should be an easy win, but we face entrenched opposition from those who see investment migration as an unfair “fast track” to citizenship. Some two in five (42 per cent) UK residents say that wealthy individuals should not be allowed to obtain citizenship in a country other than where they were born through investment migration, according to recent research by the Investment Migration Council.

    Capitalism faces a problem, which is the reluctance on the part of its adherents to discuss the good that it can bring to everyone. To do this effectively, we need to stand up for principles such as strict, rules-based investment migration, and be unafraid to discuss the benefits it brings.

    Joni was right – you don’t know what you’ve got till it’s gone. Let’s not allow capitalism and free movement to slip through our fingers, lamented only after it’s been replaced by more restrictive systems that throttle free movement, entrepreneurship, and investment that benefits us all.

  • U.S. Passports Are Now On Par With Mexico As Freedoms Are Cut

    A new ranking of passports finds that U.S. citizens have had their freedoms severely curtailed by the coronavirus pandemic.

    According to the latest Henley Passport Index, U.S. passports have access to 158 countries, 27 less than before coronavirus and largely due to the E.U.’s decision to temporarily ban travellers from the U.S.

    “The U.S.’s dramatic decline in passport power means that Americans find themselves with a similar level of travel freedom usually available to citizens of Mexico,” says Henley & Partners, a citizenship firm which compiles the ranking. A Mexican passport allowed visa free travel to 158 countries before it too was banned by the E.U.

    This means the U.S. passport ranks 25th in the world, a significant drop from 2014 when it topped the ranking.

    “We see an emergence of a new global hierarchy in terms of mobility, with countries that have effectively managed the pandemic taking the lead, and countries that have handled it poorly falling behind,” says Christian Kaelin, chairman of Henley & Partners.

    Almost every citizen in the world is now more restricted in global travel than before the coronavirus-pandemic. The exceptions are Japan, which tops the Index, South Korea and Uruguay, whose citizens are still able to travel to the same number of countries.

    However, there is more upheaval to come, says Kaelin. The pandemic has shown us that countries can shut their borders to certain nationalities at a moment’s notice.

    “Numerous governments will use epidemiological concerns as a justification for imposing new immigration restrictions and nationality-targeted travel bans,” says Prof. Dr. Yossi Harpaz, an assistant professor of Sociology at Tel Aviv University.

    Further temporary bans could come into effect if there is a second wave of Covid-19 in certain countries, or if another health threat emerges, such as bubonic plague.

    The Safest Country In The World

    With international travel disrupted indefinitely, many with the means are looking at relocating to or becoming a citizenship of “safe” countries.

    “We can expect places that are governed well and better equipped to deal with pandemics to become destinations people will seek to move to,” says Charles Phillips, a researcher and consultant for Oxford Business Group.

    The safest of all countries is Switzerland, according to a ranking by the non-profit Deep Knowledge Group. The U.S. is ranked in 58th place and the U.K. 68th.

    Knight Frank, a real estate consultancy, says it has seen a 61% increase in online enquiries for Swiss houses between April and mid-May compared to the same period in 2019.

    Buyers are looking for places near to “Swiss mountains and lakes, given their accessibility, good broadband connectivity and first class healthcare system,” says Alex Koch de Gooreynd, Knight Frank’s head of Swiss sales.

    However, the Swiss do not give away residency permits lightly, or cheaply. Tax liability may range from CHF 150,000 ($161,850) to over CHF 1 million ($1.08 million) per year for new residents.

    But for U.S. citizens this is still unobtainable even if they can afford it. “The Swiss government has not announced a date when Switzerland will lift the current entry restrictions for U.S. citizens,” says the U.S. Embassy in Switzerland and Liechtenstein.

    No amount of money, it seems, can buy you entry into some countries without the right passport.

    Source

    forbes.com

  • Reactions to MIIP Changes Mostly Positive, But Concerns Raised About Property Minimums

    The Maltese Individual Investor Programme (MIIP) will be undergoing monumental changes ahead of its relaunch in September; the government has “scrapped” the old version of the program and introduced one that requires prospective investors create so-called genuine links.

    With ever-increasing pressure from the EU, the Maltese government had focused on delivering a new programme that would see greater levels of endorsement from concerned officials. Citizenship Parliamentary Secretary Alex Muscat told reporters on Friday that “The easy way out was to go from IIP 1 to IIP 2 but we wanted to have more people onboard, including the Opposition”.

    Reactions to the changes began pouring in soon after the announcement of the changes, with various Maltese officials and media outlets commenting on the matter.

    Long-time critics change tune
    The Malta Independent praised the changes, demonstrating a softer-than usual stance on the notion of citizenship by investment.

    “We have said before that we do not believe in the concept of selling citizenship, and we still feel that passports should not be sold to the mega-rich just because they can afford them,” read an editorial on the newspaper’s website.

    “But we have also seen how important the money generated by the scheme was during the Covid-19 pandemic, and the projects that have been paid for by the National Development and Social Fund, where 70% of the IIP proceeds go.”

    They went on to describe the changes as a “step in the right direction”.

    The Malta Chamber of Commerce, Enterprise and Industry, an association charged with representing the Maltese private sector, voiced its approval of the changes as well. The Malta Chamber issued a statement in which they highlighted their concerns regarding the old structure of the MIIP, stating:

    “One missed opportunity in the previous programme was the fact the country did not fully tap into the wider opportunities most of these applicants could have brought in terms of potential investment or expertise to the local economy and social wealth.”

    The Chamber revealed it had previously sent recommendations regarding the MIIP to the government, and that the government had taken them into consideration.

    “Most of the changes proposed by Government were included in The Malta Chamber’s recommendations and we applaud the inclusion of these proposals such as the 100% increase in minimum value of property purchased by applicant, the mandatory philanthropic donation, and the quota limitation to 1,500 applications.”

    The Malta Chamber was, however, critical of one aspect of the new MIIP, concerning the option of renting property instead of purchasing it, writing:

    “Despite the good intentions behind the objective to increase the rental value from the present 16,000 to 18,000 euros per annum, the Chamber believes that this will not serve to separate the rental market for IIP investors from that of the average wage earner who usually rents at the same value. The Chamber believes that this will only serve to artificially inflate rents for the rest of the rental market and hence prejudice industry competitiveness. This will be a shame.”

    Plaudits of the new MIIP did not halt there, however. The leader of the Maltese Nationalist Party Mr. Adrian Delia, a well-known member of the opposition during the preceding version of the MIIP, praised the changes. “For the past years I have been critical about this scheme and now it is good to see that the government is finally listening to the advice of the Nationalist Party,” said Mr. Delia when asked about the matter.

    Delia also addressed the imminent Moneyval report, an EU financial and anti-money laundering analysis of its member states that has historically expressed apprehensions about RCBI programs. On this matter, Mr. Delia stated: “Our Prime Minister said that we will pass the Moneyval report with flying colours, and I hope so too, as we are trying our best to ensure that we pass this very important test.”

    While several of the service providers with whom IMI has been in touch did not wish to comment on the changes (we understand they are expected to refrain from reacting publicly until the changes are finalized), the ones who did agree to go on record struck a largely upbeat tone about the new MIIP.

    “In my view, the changes are positive,” said Luke Frendo, an MIIP specialist with Frendo Advisors. “They reiterate a commitment to maintaining high standards of due diligence, whilst retaining the competitiveness of the existing programme. We look forward to the new programme receiving the same high caliber of applicants that the existing one has”.

    “Allow investors a return on their real estate investments”
    Not all stakeholders were equally pleased with the government’s decisions, however. Roderick Cutajar, CEO of Malta-based ImmVest and erstwhile head of the Malta Residency Visa Agency, expressed concern that the MIIP’s position in the European RCBI market might be compromised by the doubling of the real estate investment minimum.

    The MIIP, explained Cutajar, competes against other European programs of equal attraction. “Price, in this particular scenario, is of the essence if Government is to continue attracting high net worth individuals to the island,” he commented. “The increase in real-estate is not insignificant. Other asset-based RCBI programs, like those of Cyprus, Montenegro, Portugal, and others, allow beneficiaries a return on investment on their properties whilst, in Malta, purchased property cannot be rented unless in a special, designated area. It would be extremely beneficial if Malta adopted a similar approach, i.e. allowing investors a return on their real estate investment,” he emphasized.

    Though disconcerted by the dramatic rise in property investment minimums, Cutajar welcomed the two-tier contribution arrangement, which allows those who contribute more to naturalize faster, as well as the cap on approvals at 400 per year and 1,500 overall.

    “The option of providing two different routes for applicants and the capping announced by the Hon. Alexander Muscat are very good moves,” continued Cutajar. “Furthermore, MIIP due diligence processes are considered a benchmark for other CIPs, thus reassuring prospective investors about the high levels of quality people being approved as citizens of Malta. The Maltese passport will certainly continue to be sought after given the correct legislation is implemented.”

    Speaking from the point of view of investor source markets, Mimoun Assraoui of RIF Trust, a Dubai-based CBI consultancy, appeared relieved that the program’s future now appears settled.

    “The changes are positive,” began Assraoui. “I spoke to our colleagues in our office in Malta and they are excited about the changes and we all want MIIP’s second iteration to be started as soon as possible.”

    The only possible negative he could see, he said, echoing Cutajar, was the doubling of the real estate investment requirement. But even that, he expected, would not pose much of a deterrent.

    “The average investment for those MIIP clients who opt to buy [as opposed to lease, the option preferred by the vast majority of applicants] is already close to the new minimum anyway,” he said, adding that his firm is now eagerly anticipating parliamentary approval of the changes so that they can once more assist their clients in applying to the MIIP.

    Backlog of Investor Visa Applications in Limbo as Program Dies

    imidaily.com

  • Streamlined Immigration Process for Holders of British National (Overseas) Status in Hong Kong

    At a Glance
    The new program will make it easier for those with British National (Overseas) status to live, study, and work in the United Kingdom, the government announced.

    Applicants under the new process would be able to sponsor their dependants for status. Also under the new system, individuals would be able to obtain permanent residence after five years in the United Kingdom.

    The situation
    The UK Prime Minister and Foreign Secretary have confirmed that in response to the enactment of the National Security Legislation in Hong Kong, the UK government will create a new streamlined immigration process for holders of British National (Overseas) status (BN(O)) – a form of British nationality that was created during the runup to the handover of Hong Kong from the United Kingdom to China in 1997. There will be no quota on entrants under the route.

    A closer look
    Rights under new process. The new process will allow holders of BN(O) status to apply to live, work and study in the United Kingdom for an initial period of five years. Entrants under the process will have the unrestricted right to work and study in the United Kingdom and will be allowed to sponsor their dependant family members.

    Streamlined application. The Home Office will implement a streamlined application process, the details of which are unannounced.

    Path to citizenship. Entrants under the new process will qualify for permanent residence after five years and will be able to apply for full citizenship after a further 12 months.

    Background
    History of BN(O) status. BN(O) status is a form of British nationality that was created in the runup to the handover of Hong Kong from the United Kingdom to China in 1997. Holders of the status are able to hold a British passport, but this does not entitle them to full UK citizenship rights. Currently, holding BN(O) status provides only minor UK immigration advantages, such as easier access to the Tier 5 Youth Mobility scheme and slightly easier route to British citizenship by naturalisation.

    Numbers of eligible applicants. There are approximately three million holders of BN(O) status in Hong Kong, which was available to those born in Hong Kong before July 1, 1997. There are estimated to be around 300,000 BN(O) passport holders, and approximately three million residents of Hong Kong entitled to the status who would be eligible to apply under the scheme.

    Existing UK immigration path. Existing UK immigration rules allow BN(O)s to enter the United Kingdom for an initial period of six months, but this is subject to a requirement not to work or study.

    Looking ahead
    The UK Home Secretary is expected to make an announcement with further details on the scheme soon.

    Backlog of Investor Visa Applications in Limbo as Program Dies

    fragomen.com

  • Qatar- Cyprus is Looking to Become a European Hub for Investment

    Cyprus’s ‘health-over-wealth response to the pandemic has made the island an increasingly desirable place for investors, according to new global citizenship figures.

    Applications to invest and stay in Cyprus jumped by 250% in the first quarter of 2020 compared to the same period in 2019. Data analysts also predict a further shift in global movement with those who can afford it choosing to live in countries that have better weathered the crisis.

    Global strategy adviser Parag Khanna, founder of FutureMap, said, ‘The combined effect of the Covid-19 pandemic on public health, the global economy and social behaviour may augur deeper shifts in our human geography — and our distribution around the world.

    ‘As the curtain lifts, people will seek to move from poorly governed and ill-prepared places to more proactive countries with greater resilience and better medical care.

    The Mediterranean island of Cyprus which boasts 320 sunny days a year has always profited handsomely from tourism, pulling in €54.6mn in 2019.

    However, when the pandemic started to run unchecked throughout Europe, Cyprus closed all airports and shut up shop. These early restrictions have largely paid off.

    The latest figures released by the government show the total number of coronavirus cases on the island at 935. The health ministry has recorded 17 deaths.

    Tourism has paid a heavy price hotels remain closed, as do restaurants, and the island’s beaches are almost empty, though restrictions on movement have been relaxed since May 21.
    It is not yet known when travel restrictions will be lifted yet there remains strong interest in Cyprus as a long-term destination rather than a holiday hotspot.

    The sharp rise in year-on-year applications for the island’s real estate-linked investment migration programme reveals a desire to live in Cyprus that experts predict will only be helped by the government’s swift response to the pandemic, not to mention recent studies which showed a strong correlation between severe vitamin D deficiency and mortality rates.

    Christian Kalin, chairman of the global citizenship firm Henley & Partners, said, ‘Investment migration has shifted from being about living the life you want in terms of holidays and business travel to a more holistic vision that includes healthcare and safety.

    Although ‘Golden Visa’ programmes have been criticised by the European Union, Cyprus is one of a number of countries offering permanent residency opportunities to investors. Other governments offering similar incentives include Australia, Austria, Antigua, St Kitts and Nevis, Tuvalu, Vanuatu, Portugal, Switzerland, Montenegro and Malta.

    These days, tourism is no longer the golden goose it once was and Nicosia-based research consultancy Sapienta Economics believes the country’s real GDP may only contract by between 3.5% and 9.2% in 2020 as a result of Covid-19.

    Director Fiona Mullen said: ‘Tourism remains a key driver of growth in Cyprus, accounting for 6.1% of GDP in 2019, and with obvious knock-on effects for sectors such as construction and retail.
    ‘However, its impact is not as big as it was in the past, having been overtaken by sectors such as finance and insurance, professional services and real estate.

    ‘We estimate that these days the total contribution of tourism to GDP is 12%, down from almost 20% in 2000.

    Since the financial crisis of 2008, Cyprus has been actively courting foreign direct investment into the country, offering a number of attractive incentives to establish the island as a world-class destination for international business activity.

    George Campanellas, CEO of the government agency Invest Cyprus, said, ‘In recent months we have seen increasing interest in investment opportunities on our island from several countries, including Qatar.

    Offering one of the lowest corporate tax rates in the EU as well as multiple exemptions for companies and individuals, the discovery of natural gas has helped bolster the government’s ambitions.

    As well as positioning itself as an energy hub in the eastern Mediterranean, Cyprus is fast becoming one of the top emerging investment fund centres in Europe. The boom in real estate and construction though slowed by the pandemic shows no sign of abating with prestigious large-scale projects continuing to attract investment as well as world-class stars such as Shakira and her footballer husband Gerard Pique, who have reportedly bought a huge new villa off the west coast of the island.

    Cyprus also has an enviable and globally-respected reputation in the maritime industry, with the island considered to be one of the most reliable and competitive shipping centres in the world in terms of services, registration fees and tax

    And the latest addition to the island’s business portfolio has even lured Hollywood hotshot Nic Cage over after the government gave production companies that film in Cyprus a choice between a cash rebate or tax credit, among other incentives.

    Campanellas said the end goal was to establish Cyprus as a world-class destination for international business activity and investment.

    While acknowledging the huge role holidaymakers play in the economy, he said a recent survey had shown a high level of satisfaction among investors at the government’s handling of the coronavirus crisis, which has all but killed tourism for 2020. Campanellas said, ‘Considering the current global circumstances, we know that the island cannot rely heavily tourism for the recovery of the economy and we actually have much more to offer the wider world. That’s why we put extra attention in implementing our strategic plan before the pandemic was even a consideration.
    ‘Our objectives are simple and attainable. We want more tech companies to move their headquarters to Cyprus, we want to promote Cyprus as a European centre for investment funds and fund managers, we want to strengthen the higher education sector, develop the filming and animation industry, and attract even greater investment in our renewable energy and tourism projects.

    ‘The world is changing and we are determined to be part of that change and emerge stronger from this crisis.

    Backlog of Investor Visa Applications in Limbo as Program Dies

    menafn.com

  • Boris Johnson Offers Refuge, British Citizenship Path for Nearly 3 Million Hong Kongers

    British Prime Minister Boris Johnson pledged Wednesday to overhaul immigration rules to grant almost 3 million Hong Kong residents a pathway to British citizenship, a response to Beijing’s move to impose a far-reaching security law here that many fear will dismantle the city’s political freedoms.

    Johnson’s vow comes as the United States, Canada, Australia and others face pressure from lawmakers and human rights groups to offer residency to Hong Kong people fleeing deteriorating political circumstances in the former British colony, which was promised a high degree of autonomy under the terms of its 1997 handover to China.

    London’s move, which Johnson said he would implement when China formally enacts the security law, could emerge as among the most significant ramifications of Beijing’s effort to undercut Hong Kong’s freedoms and bring the city more closely under the Communist Party’s authoritarian rule. It would potentially grant British residency and working rights to up to 40 percent of Hong Kong’s population, raising the specter of a brain drain from the Asian financial center.

    In op-eds published in the South China Morning Post and the Times of London, Johnson said the Chinese security law — which will criminalize broadly worded offenses such as sedition, subversion and foreign interference — gives Britain “no choice but to uphold our profound ties of history and friendship with the people of Hong Kong.”

    Specifics of the new law are scant, but the approved proposal will allow Chinese security forces to operate in Hong Kong for the first time, enabling them to crush dissent as they do on the Chinese mainland. Hong Kong has been rocked in recent times by widespread protests calling for greater democracy and opposing Beijing’s tightening grip.

    Johnson wrote that his government would allow holders of British National (Overseas), or BNO, passports to come to Britain for a renewable period of 12 months and gain the right to work. The move “could place them on a route to citizenship,” he said.

    These passports, a holdover from British rule issued to people born before 1997, currently allow holders to stay in Britain for six months but do not afford work rights or residency. About 350,000 people in Hong Kong hold these documents, but an additional 2.5 million are eligible.

    China’s Foreign Ministry said Wednesday that Britain has no jurisdiction over Hong Kong. Britain must “step back from the brink” and “stop interfering in Hong Kong’s affairs and China’s internal affairs,” spokesman Zhao Lijian told reporters.

    As the former colonial ruler, London was a signatory to the Sino-British Joint Declaration in which China agreed to preserve Hong Kong’s political freedoms and way of life until 2047.

    Hong Kong’s government declined to comment Wednesday and referred The Washington Post to statements by China’s Foreign Ministry.

    Lawmakers in other Western countries have issued similar calls to offer refuge to people fleeing the crackdown in Hong Kong, although the BNO passports give Britain a relatively easy route to welcome residents of the territory. This week, Senate Majority Leader Mitch McConnell (R-Ky.) said the U.S. response should “mirror those of other democracies who have opened their doors to Hong Kongers fleeing oppression.”

    “Our nation has a rich heritage of standing as a beacon of light and freedom, from refugees of war to those escaping the Iron Curtain,” he said. “We should exercise it again for the people of Hong Kong.”

    President Tsai Ing-wen of Taiwan has said her government is also working on measures to allow Hong Kongers to move to the self-governed democracy to live and work.

    Hong Kong protesters have repeatedly demonstrated outside the British Consulate and have pressed the British government to allow BNO passport holders a pathway to full citizenship. Since China announced it was imposing the security law by fiat, bypassing Hong Kong’s legislature, dozens have flocked to renew those documents, local media reported.

    Rana Mitter, director of the University of Oxford’s China Center, said Johnson’s move underscores the “very significant turn — not 180 degrees, but let’s say 90 degrees” — over recent months in the British government’s approach to China. He said that for Britain, “it’s becoming clearer that on certain issues, including maintenance of guarantees under the joint agreement on Hong Kong, it is not willing to be silent.”

    By offering a path to citizenship for a significant number of people, the Johnson government can send a strong signal after Brexit that its departure from the European Union was “not purely about drawing up the immigration drawbridge,” Mitter said.

    There has long been a strong sentiment in sections of Britain’s ruling Conservative Party that the country did not do enough for Hong Kong during the handover and that they want to do more now.

    A YouGov poll conducted last week found that more Britons support than oppose giving BNO passport holders greater rights to live and work in Britain. About one-third were undecided.

    Still, some in Hong Kong expressed skepticism about leaving, daunted by the prospect of navigating life in the United Kingdom.

    “The unemployment rate in the U.K. is high,” said Ken Chong, a 30-year-old BNO passport holder who works at a bank in Hong Kong. “I’m not sure it will make a big difference for BNO holders, but as long as they are pressuring the Chinese government, then that’s a good move.”

    Wayne Ma, a social media editor in Hong Kong, said he would not consider moving to Britain, because he could not afford to live there.

    “I wouldn’t count on Britain to save Hong Kong,” he said. “I think it is unable to even fend for itself.”

    Backlog of Investor Visa Applications in Limbo as Program Dies

    Washingtonpost.com

  • Investment Migration And The State Of Play In Europe

    Investment Migration And The State Of Play In Europe

    Investment migration refers to the attainment of citizenship or residential rights in return for a financial investment or other contributions to the host country. Today, investment migration is a global industry and is featured in immigration law in most UN recognized countries, albeit in different forms and shapes. Indeed, while there are currently 12 citizenship by investment (CBI) programs stricto sensu, many countries offer facilitated naturalization paths that allow for acquisition of citizenship under lessened requirements. Facilitated naturalization is often allowed on grounds of “special achievements” of applicants or “special interest” of states. Residence by investment (RBI) programs have similar paths to residency: while some RBI programs are specifically designed to attract foreign investors in return for residential rights, many countries with no investment programs issue business visas, international talent visas, and/or other economic residence options.

    Five of the twelve formal citizenship by investment programs are in Europe, introduced by Cyprus, Malta, Moldova, Montenegro, and Turkey. Furthermore, the Albanian Prime Minister, Mr. Edi Rama, recently announced that Albania may also introduce a citizenship by investment program soon, which would add one more investment migration program in the “old world”. Other European states, including EU Member States, allow discretionary naturalization on the grounds of special achievements ̶ including economic achievements ̶  of applicants. Reportedly, 22 EU Member States allow discretionary naturalization.

    The number of investment programs in Europe (specifically in EU Member States) has, naturally, triggered the interest of EU policymakers. The freedom of movement enjoyed by EU citizens, by virtue of the EU law, means that citizens of any EU Member State can settle in any other Member State as well as in Switzerland, Iceland, and Norway. Thus, a Cypriot or Maltese citizen who has obtained his citizenship through an extraordinary investment, can freely relocate to Germany and enjoy most rights domestic citizens do, including the right to stay, establish, or work there. Therefore, the EU has a legitimate interest in following developments related to the acquisition and loss of citizenship in EU member States.

    EU institutions have a lot of criticism about these programs and initiate a lot of discussions (and potential legislation) to address them, but this criticism and activity is one sided. The IMC works to balance the discussions and is encouraging other groups to work with them to do the same. In doing so, the integrity of the programs will be strengthened all around.

    EU Criticism

    Investment migration has attracted strong criticism from EU institutions ever since the launch of the Maltese CBI program, which triggered proactive EU involvement. Since this time, various EU institutions and bodies have initiated discussions and levied numerous critiques of CBI and RBI programs. Criticism was related to the general principle of fairness and discrimination, the EU principle of sincere cooperation, the principle of genuine link, the commodification of citizenship, and specific issues surrounding corruption, money laundering, and other criminal activity.

    In 2014, the European Parliament (EP) questioned whether investment programs aligned with EU values, asking the European Commission (EC) to analyze the matter further. The TAX3 Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance, established in March 2018, demanded that all CBI and RBI programs be phased out in EU Member States, stressing that CBI and RBI programs carry significant risks related to devaluation of EU citizenship, corruption, money laundering, tax evasion, lack of proper due diligence checks, and uncertain economic sustainability and viability of the investments provided through the programs. The European Parliamentary Research Service (EPRS) researched investment migration in somewhat greater detail. However, the EPRS study ignored several relevant legal arguments related to the subject of sincere cooperation between EU Member States, the principles of fairness and discrimination in light of citizenship, and the principles of fairness and discrimination.

    In January 2019, the EC issued its report on investment programs, relying heavily on previous documents of EU institutions and bodies. While recognizing that applicants may invest in a Member State for legitimate reasons, the EC underscored the risks associated with investment migration programs, including money laundering, corruption and tax evasion, as well as the possibility of criminal infiltration in the EU. Following the report, and through the lobbying efforts of the Investment Migration Council, the EC set up a group of experts from EU Member States to look at the specific risks associated with investment migration, develop a common set of security checks in this respect, and address the aspects of transparency and good governance with regard to the implementation of investment migration programs. It also consulted with civil society and industry representatives (including IMC) who were given the opportunity to provide their feedback on a number of questions raised in the report.

    Most recently, the European Economic and Social Committee reaffirmed the stance of the EP’s TAX3 Special Committee in its Opinion on investment programs, calling for phasing out all investor programs and urging EU Member States to follow that recommendation “or provide reasonable arguments and evidence for not doing so”.  It further recommended that “while working towards a phase-out of existing schemes in the EU, accession countries should not be allowed to run CBI or RBI schemes when they join, so that no new schemes are added to the ones currently in place”.

    With the new MEP’s and European Commission in place for the ninth parliamentary term, discussions on investment migration in the EU are expected to continue in the upcoming years. The European Parliament Committee on Economic and Monetary Affairs (ECON) has confirmed the establishment of a permanent subcommittee on tax and financial crime (TAX4) for the 2019 – 2024 parliamentary term, which can be seen as a confirmation that the EP intends to continue to focus strongly on these issues during the mandate. Various intergroups, and especially the recently formed intergroup on anticorruption, are also expected to raise questions related to investment migration in the future.

    Involvement of the Investment Migration Council

    The Investment Migration Council (IMC) supports discussions by civil society, governments, policymakers, and industry professionals aimed at strengthening the legal and security aspects of citizenship and residency programs. Unfortunately, reports from EU institutions are often unbalanced, focusing too heavily on the critiques of the programs and rarely taking into account the benefits and evident legal arguments in favor of investment migration. Furthermore, these reports are largely shaped by negative stereotypes and bias against the industry, which leads to unbalanced information and wrong conclusions. Investment migration is indeed a sensitive and highly politicized matter. This is primarily because of the money involved in trade with (what seem to be) non-tradable goods. Money makes investment migration different than other forms of facilitated naturalization, such as fast-track naturalization of talented sportsmen or naturalization through marriage or ancestry. Yet, sensitivity and politics are one thing; law is quite another. In the eyes of the law, citizenship and residency through investment are perfectly legal ways of acquiring citizenship or residency in the country providing for such options and not much different from other legal ways of facilitated naturalization or immigration.

    The IMC works to paint the whole picture of investment migration and create balance in the discussion, by interacting with other professional associations, governments, and international organizations daily. Furthermore, the IMC continuously assesses various aspects of the investment migration industry through vigorous research, including academic articles, reports, forums, education, and more. The aim is twofold: first, the IMC seeks to improve public understanding of all aspects of the investment migration industry; and second, it aims to promote education and high standards among its members. In pursuing these objectives, the IMC is guided by three important edicts:

    1.    The IMC is primarily focused on the legal aspects of investment migration. When it comes to the acquisition of citizenship, national laws and EU law are rather clear: citizenship matters, and the criteria for acquiring citizenship remain the sole competence of Sovereign States/EU Member States.

    Accordingly, the IMC has addressed points made by EU institutions that go against the sovereign rights of states to decide on questions related to acquisition of citizenship. Furthermore, the IMC participated constructively in the investment migration discussion hosted by the European Commission and arranged numerous meetings to make EU and other policymakers aware of their standpoint and work.

    2.    Various studies and analyses aside, investment migration remains largely an unregulated industry. Establishing minimum standards across the industry would contribute to creating a common regulatory framework that would address the risks associated with investment migration. 

    The IMC has started bridging the gap created by the lack of standards. The IMC, in coordination with BDO, Exiger, and Refinitiv, formed a Due Diligence Working Group to examine the state of play of due diligence and explore the potential for minimum standards across the investment migration industry. An independent research think tank, commissioned by the IMC, has drawn on industry-wide insights to conduct independent research on these questions and produce two reports.

    3.    Any objective assessment of the investment migration programs should include all relevant aspects and players in the industry.

    The IMC repeatedly called EU institutions to involve them in discussions and other activities related to CBI and RBI programs. Challenges and issues can be successfully addressed only if policymakers and stakeholders are willing to hear all arguments and assess objectively all relevant aspects of the industry. The IMC is open to different opinions and arguments that would contribute to a healthy and regulated industry.

    Finally, all actors working in the field of investment migration ̶ within or outside of Europe ̶ should join the IMC’s efforts and work together to put an end to abuse of investment migration programs, and maintain high standards for the industry.

    [1] These include 12 formal citizenship programs specifically designed to attract foreign investors offered by: Antigua and Barbuda, Cyprus, Dominica, Grenada, Jordan,alta, Moldova, Montenegro, St Kitts and Nevis, St Lucia, Turkey, and Vanuatu.

    [2] On 21 June 2020, the Moldova’s Parliament has repealed the law on citizenship by investment thus closing the program before it really even properly started.

    [3] ‘Europe’ is not only about geography but is also a historical, political and a cultural concept. For instance, Cyprus is geographically in Asia, but is rather European and a fully-fledged EU Member State (except for Northern Cyprus, which is not part of the EU); the largest part of Turkey is in Asia, but the country is candidate for EU membership; Greenland is geographically part of North America, but is politically and culturally associated with Europe, to name but a few examples.

    [4] EUI Globalcit database – information under ‘Mode A24, Special Achievements’, available at: <https://globalcit.eu/acquisition-citizenship/> last accessed 11 February 2020. As of 1 February 2020, the United Kingdom is not a part of the EU and has been treated as a non-EU Member State for the purposes of this analysis. It is worth mentioning, however, that the UK Tier 1 Investor visa program attracts a large number of candidates from around the world.

    [5] For detailed information on free movement of all nationalities see Dimitry Kochenov and Justin Lindeboom (eds), ‘Kälin and Kochenov’s Quality of Nationality Index Nationalities of the World in 2018’ (Hart, Oxford 2020).

    [6] European Parliament resolution of 16 January 2014 on EU citizenship for sale (2013/2995(RSP).

    [7] Para. 91, Draft Report of the Special Committee on financial crimes, tax evasion and tax avoidance on financial crimes, tax evasion and tax avoidance (2018/2121(INI)).

    [8] Para. 87, Draft Report of the Special Committee on financial crimes, tax evasion and tax avoidance on financial crimes, tax evasion and tax avoidance (2018/2121(INI)).

    [9] EESC Opinion, ‘Investor Citizenship and Residence Schemes in the EU’ SOC/618-EESC-2019 (EESC Opinion).

    [10] Para 1.1. EESC Opinion.

    [11] Para 4.2.2 EESC Opinion.

    [12] Christian H. Kälin, Ius Doni in International Law and EU Law (Brill Nijhoff, Leiden/Boston 2019) 48.

    [13] This is notwithstanding the growing importance of EU law with regard to certain aspects of citizenship matters, such as loss of EU citizenship. States’ sovereignty and respect for their freedom of deciding on citizenship criteria is of paramount importance and a starting point for every discussion of investment migration.

    [14] The two reports on ‘Due Diligence in Investment Migration Current Applications and Trends’ and ‘Due Diligence in Investment Migration Best Approach and Minimum Standard Recommendations’ are available at <https://investmentmigration.org/industry-reports/> last accessed 11 February 2020.

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