In modern times, immigration is one of the most hotly debated topics. Some people perceive it as a source of competition for jobs, houses, and public resources. Others see it as a necessity for any country seeking to boost economic growth, business innovation, and cultural development. High net worth immigration, however, is an entirely separate case. The lack of threat to jobs or resources and the resulting investment into a country’s private and public sectors renders high net worth immigration a desirable affair for all. The United Kingdom provides an example.
Immigration: The United Kingdom
In the 1940s and 50s, post-war United Kingdom (UK) was severely depleted of human and economic capital. Keen to strengthen its market and improve income revenues, the country created the British Nationality Act in 1948, which allowed all Commonwealth citizens to work and reside in the UK free from previous immigration restrictions. Citizens from Africa, Australia, the Caribbean and more received freedom of movement, and consequently travelled to the UK, boosting British economic success. Organisations which required overseas labour and skills, such as the National Health Service (NHS), flourished. However, public unease regarding unrestricted migration emerged. The UK responded with legislative measures reducing the entry and settlement rights of Commonwealth people: the 1962 and 1968 Commonwealth Immigrants Acts and the 1971 Immigration Act.
Whilst Commonwealth citizens lost migration rights, Europeans gained them when, in 1973, the UK joined the European Union (EU), then the European Economic Community. For decades, migration between Europe and the UK was generally equal. This changed following the decision to include additional countries in the EU in 2004, namely: Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia. The UK’s strong economy and reputation as one of the world’s leading education centres started to attract more immigrants than persons leaving the UK for Europe. Public anxiety surrounding immigration again began to develop, culminating in 2016 when 51.9% of eligible UK voters selected to leave the EU. The UK’s approach to immigration had changed again.
High Net Worth Immigration
Large-scale immigration continues to be a subject of debate in the UK. Yet this generally excludes another type of immigration: that of high net worth individuals (HNWIs). A HNWI is generally deemed a person with US$1 million+ worth of assets (excluding their primary home). They generally own or manage companies – often ones they founded themselves – and therefore do not require a job in another country. Usually married persons with families, they have built their homes, often owning multiple residences, and therefore do not settle in countries they visit. Indeed, unlike the person who moves abroad to obtain work, HNWIs tend to travel to expand their businesses, creating new jobs and bringing in investment, or for a holiday. When they do visit a country, they typically bring in high revenues to both the private and public sectors, for instance through commerce, hospitality, taxation, medical tourism, and business. All this leads both persons pro and persons against general large-scale immigration to agree: HNW immigration brings financial gain. Certainly, the UK’s residence by investment programme, the Tier 1 Investor Programme, was not part of the argument by advocates of Brexit.
Due Diligence: The UK Tier 1 Investor Programme
However, the Tier 1 Investor Programme has suffered criticism. Not for encouraging HNW immigration, the Programme has been criticised instead for poor due diligence on applicants. Global Witness, an anti-corruption NGO, has reported that in 2008-2015 the UK was “letting people in without sufficient security checks.” This was because the “Home Office assumed that the banks were doing the checks on the individuals” while UK banks assumed that, “because this individual was applying for a visa via the Home Office, the checks would be done further down the line.” Lord Wallace of Saltaire supports Global Witness’ findings, condemning the Programme as “just one of the many ways in which illegally acquired money has flowed into London.”
Other Countries
The UK is not the only country to realise the benefits of HNW immigration. Other European countries also offer residence by investment programmes: Austria, Greece, Italy, Malta, Portugal, and Spain. The United States offers both permanent and temporary residence to investors via the EB-5 Investor and E-2 Non-immigrant Visa Programmes. Other nations offer citizenship instead of residence. In Europe, Austria, Cyprus, and Malta are industry veterans; last year Moldova and Montenegro joined and launched their own citizenship by investment programmes. In the Caribbean, Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, and St Lucia. Cambodia, Jordan, Turkey, and Vanuatu also offer such programmes.
Due Diligence: The Caribbean
In contrast to the UK’s residence by investment programme, a few of these countries have been celebrated for running strict due diligence on applicants. St Kitts and Nevis is a case in point. The West Indies nation founded the industry when it [launched] its Citizenship by Investment Programme in 1984. Since then, it has operated a multi-jurisdictional, multi-level due diligence programme, for which it recently received top marks in an industry index, and pioneered AML best practices. Dominica, a nearby island state, runs a similarly rigorous due diligence programme, for which it also has attracted praise. Dominica has been running its Citizenship by Investment Programme for 20 years and last year, the Financial Times’ wealth management magazine named it the best in the industry, taking into account, amongst other things, its security procedures.
In spite of the high status of the Caribbean citizenship programmes and the industry recognition they have garnered, many people reside under the false illusion that, by authorising persons to travel to Europe and the UK without a country-specific visa, such programmes have the potential to undermine personal and finance security in these countries. This misconception is the result of a conflation – of general, low-skilled immigration with HNW immigration. As expounded above, these two types of immigration have very different effects on a country and its economy. The misconception also overlooks an intrinsic part of the Caribbean programmes: their substantial economic and security requirements. Regarding financial requirements, applicants to a Caribbean programme must donate a minimum of US$ 100,000, plus due diligence, processing, and professional fees. As noted, an individual who can afford this is hardly likely to be in search of a job elsewhere.
In terms of security, the vetting procedures of all five Caribbean programmes are broad and extensive. Applicants must provide: detailed evidence of employment, residential, educational, and personal histories; detailed evidence of their source(s) of wealth; a clean criminal record from every country visited for more than six months in the past 10 years; and biometric data. International wanted lists and terrorism databases are consulted and documents and evidence are examined by multiple bodies including national and government bodies trained in detecting money laundering, financial terrorism, fraud, and other crimes, and international bodies such as Interpol. Such thorough due diligence is unique to the Caribbean programmes – the UK and European programmes do not come close in their requirements. Thus, a HNWI travelling to Europe or the UK on a Caribbean economic passport, and who therefore need not obtain a country-specific visa, has actually already completed a far stricter security programme.
Conclusion
Overall, the significant benefits of HNW immigration and the lack of risk means investor immigration is greatly valued in the Caribbean nations. It is hardly surprising, therefore, that immigration there is a far less controversial and debated topic.
Source: wicnews.com
Published: 9 may 2019