Data protection commissioner Irini Loizidou Nicolaidou said on Monday she is opposed to a blanket publication of the names of foreign nationals applying for naturalisation via the citizenship-by-investment programme, arguing that it would be a disproportionate measure when juxtaposed against the need for transparency.
She was speaking in parliament, where lawmakers were discussing a bill tabled by the Greens MP George Perdikis.
Perdikis’ bill aims to amend the law so that the names and other details of all foreign nationals applying for the so-called ‘investment migration’ programme are published, in a purported bid to boost transparency about the programme, which has come under fire from the EU.
Nicolaidou said in her opinion the transparency argument is superseded by other practical considerations.
“There may be some extreme cases [of applicants] which may not be ultimately approved, but it is possible that revealing those names could damage the public interest, the defence, the economy or the Republic’s international relations,” she told MPs.
It’s understood she was alluding to foreign individuals who are under either EU or US sanctions.
Loizidou said Cyprus should follow the guidelines of the EU’s General Data Protection Regulation (GDPR) when it comes to the disclosure of personal data.
She cited Article 5 of the GDPR, which states that the personal data to be collected and processed shall be “adequate, relevant and limited to what is necessary in relation to the purposes for which they are processed (‘data minimisation’).”
In April 2018 parliament had voted down another bill submitted by Perdikis which mandated publishing in the government gazette the names of foreign nationals granted citizenship by Cyprus.
In February this year, and following criticism from overseas, the government introduced a series of changes to the citizenship-by-investment programme, in a stated bid to make it more credible.
The cabinet approved stricter criteria for applicants who will undergo background checks by a specialised foreign firm. Applicants will also be obliged to already possess a Schengen visa – a short-stay visa that allows a person to travel to any members of the Schengen Area for up to 90 days for tourism or business purposes.
Applicants who have already been rejected by other EU states will be excluded.
In January, the European Commission had warned that programmes of EU states, including Cyprus, to sell passports and visas to wealthy foreigners could help organised crime groups infiltrate the bloc and raise the risk of money laundering, corruption and tax evasion.
Although legal, these programmes are sometimes run in opaque ways and without sufficient checks on those who acquire passports and visas, the commission said, mostly raising concerns about the programmes in Malta and Cyprus.
A new visa scheme aimed at encouraging overseas entrepreneurs to settle in the UK has been criticised for being too restrictive after only two people were successful from less than a handful of applicants during its first quarter of availability.
The “Innovator” visa is one of two new visa classes introduced on April 1 as part of a concerted government effort to demonstrate the UK’s openness to talented foreign entrepreneurs as it plans to end the free movement of EU citizens into the UK as part of Brexit.
But the Home Office has also been keen to draw the rules more tightly than those for the old visas, given those were widely regarded as prone to abuse. Sajid Javid, then home secretary, said the new scheme would “widen the applicant pool of talented entrepreneurs” when he announced the change to the immigration rules last year.
There were only two successful candidates for the “innovator visa” between April 1 and 30 June, the first three months of the new scheme, out of just four applications, according to Home Office data published by the Office for National Statistics. Under the rules, applicants must persuade a group of business experts that they plan to set up a genuinely innovative business in the UK.
The visa replaced the now discontinued “Tier 1 Entrepreneur” visa. The Home Office said when it announced its plans in March that it demonstrated the government’s “commitment to attracting leading talent”.
A further 23 people were successful in the other new visa class — the “Start-Up”, which replaced the “Tier 1 Graduate Entrepreneur” visa — out of a total of 32 applications in the quarter.
Nadine Goldfoot, a partner at Fragomen, a specialist immigration law firm, said part of the problem with the Innovator visa was that the “endorsing bodies” meant to vet ideas had not been given long enough to get their programmes in order.
In the longer term, she said, it was a problem that the government insisted an idea had to be “innovative” and that nearly all the endorsing bodies were focused on digital technology industries.
“We speak to successful entrepreneurs daily who are looking to establish a business in the UK,” Ms Goldfoot said. “They have sound business plans and money to invest. However, they aren’t necessarily tech-focused, so stand no chance of obtaining an endorsement from an approved body as things stand.”
The number of applicants who are approved under the new system is much lower than those for the old visas. Over the past year, the government approved 1,403 applications for “Tier 1 Entrepreneur” visas, while 282 people were granted a “Tier 1 Graduate Entrepreneur” visa.
The Home Office defended the new scheme and said the low numbers for the new visa classes were “not unusual” and in line with the initial performance of previous schemes that subsequently proved popular.
In the first three months after the launch of the old “Entrepreneur” visa scheme, just six were granted, while there were none granted under the “Graduate Entrepreneur” programme, according to the department.
European politicians, Transparency International, Global Witness, the Guardian, and many other outfits ideologically antipathetic to the granting of citizenship or residence permits on the basis of merit have characterized CIPs as a security threat, a money-laundering mechanism, a corruption risk, and a “backdoor to Europe”.
The same institutions and individuals have concluded that such programs need “phasing out” and devoted a great deal of effort, time, and money to that end. Ignoring these programs’ socio-economic benefits, they have authored reports and press articles focusing on imagined bogeymen and a vanishingly minuscule number of instances of (subsequently corrected) missteps on the part of program authorities.
Their campaign is disingenuous, and demonstrably so.
Here’s why: If the true motives for Europe’s detractors of citizenship by investment were the prevention of security breaches, money-laundering, and corruption, they would not focus their energy on the category of immigration that is the least voluminous and, simultaneously, the most closely controlled.
Can you imagine the World Health Organization prioritizing the curing of myasthenia (an extremely rare but treatable illness) over the prevention of heart disease (the cause of 17% of deaths worldwide)? The analogy is imperfect because the presence of CIP citizens, unlike a disease, actually improve the conditions of those countries “afflicted” by them.
Between 2014 and 2017, according to Eurostat, EU countries naturalized more than 3.5 million new citizens. Of these, 5,021 came through CIPs. That’s 0.14% of the total. Incidentally, that’s about the same number of EU citizens who enlisted in the Islamic State army during the same period. I need not, perhaps, mention that none of those jihadists got EU citizenship via CIPs.
Now, I am not saying that just because CIP citizens are a microscopic fraction of EU naturalizees they should be exempt from scrutiny; God (Allah?) knows that 5,000 determined individuals can cause a lot of damage.
But the irony of the EU/Transparency International focus on the CIP “threat” is that, beyond being the smallest category of naturalization, it is also the most closely watched.
When someone naturalizes in an EU country through a CIP, they must undergo a series of stringent vetting procedures. Under the Malta IIP, for example, a “four-tier” process applies:
Tier 1 The first tier is the standard KYC due diligence done by both the IIP Unit and the Agent through databases such as World-Check.
Tier 2 The second level is the clearance obtained from the Police Authorities following thorough checks through a number of databases, such as Interpol, Europol and others. Any issues encountered at this stage are reported back to the IIP Unit. It has to be pointed out as well that to be able to visit Malta, Third Country Nationals (TCNs) have to go through the standard Schengen screening procedures.
Tier 3 The IIP team takes care of the third tier of due diligence. There are two stages at this level. The first is that of completeness and correctness of the application. This in itself would identify anomalies in the application form that highlight any potential risk. Every kind of accompanying documentation submitted to the IIP Unit is checked to ensure that it has been filled in correctly and that the documents are submitted in the proper format, correctly translated, and apostilled or notarised as the case may require. Where documents are missing or not in the correct format, or errors are identified, a request for submission is made to the agent representing the family applying for Maltese citizenshiup and the application process is paused until everything is in order. The second stage is that of a thorough and in-depth online due diligence check and verification of documents submitted. These checks involve checking with international databases for sanctioned individuals and companies. Searches are conducted on all the members of the family applying for citizenship, their corporate affiliations, any significant one-time transactions, donations, or inheritance, and any significant business partners or very close associates.
Tier 4 The fourth level is conducting outsourced due diligence. Two reports are commissioned from international companies on every family to ensure that as much ground as possible is covered and no stone remains unturned. These checks would include verification of all the information submitted, checks with databases, both international and local, in each of the family’s country of residence, and even discreet on the ground interviews with individuals who know the family.
Which due diligence processes did the other 99.9% go through? Precious few. In most cases – although each member state has its own rules – you’ll need documents like birth certificates and police records, but generally there are no World-Check controls, few Interpol/Europol/State Department/CIA checks, no bank statement/tax record requirements, and certainly no third-party outsourced due diligence, which costs thousands of dollars per applicant.
In an opinion piece last year, I pointed out four reasons why citizenship by investment isn’t a security threat to Europe and is, in fact, the least risky category of immigration:
No citizen’s background is scrutinized as thoroughly as those participating in a CIP
There are many easier and cheaper ways for dangerous people to get into the EU
Citizenships can be – and have been – revoked post hoc
It is in the interest of CIP-countries themselves to keep out bad people
You can argue against CIPs from an ethical standpoint. You can attempt to argue against it from an economic standpoint. But to argue against CIPs from a security standpoint is preposterous.
In a sane world, CIPs would get (at most) 0.14% of the attention. But they get way more than that. The ostensible reason, the (patently absurd) concerns about a “security threat”, is but a smokescreen. Such concerns are logos-based arguments on the surface but are used to disguise a primarily pathos-driven campaign.
The real reason, I suspect, is that CIPs, at their core, deal with rich people and the privileges money can buy. Western Europe, along with Latin-America, harbors a fundamental, limbic system-based and politician-encouraged distaste for anything that smacks of inequality. Eastern Europe, China, and Southeast Asia – having witnessed first-hand what happens when you try to impose equality by decree – seem inoculated against that mentality. For the moment.
Commissioner Jourova, the chief anti-CIP campaigner in the EU, has herself conceded that she does not believe in exchanging citizenship for investment. Her opposition to it, then, is rooted not chiefly in security concerns but in ideology; money shouldn’t be able to buy you citizenship. In other words, Jourova made up her mind about CIPs a priori and then looked around for practical arguments – security threats and money laundering – to justify her position.
But money launderers and terrorists don’t use the “backdoor” to Europe. It has metal detectors, sniffing dogs, and iris scanners. They prefer the front door, where security controls are rudimentary and perfunctory.
If you want the investment migration industry to take your concerns about the backdoor at face value, come back when you’ve got something more than a windscreen on the front door.
This report is the result of a collaborative analytical effort by the Fragomen Knowledge Group, a think tank of experienced immigration professionals and analysts. To analyze the current environment, the Fragomen Knowledge Group examined and evaluated a number of political, economic and cultural factors and scenarios to identify the key drivers for recent and future immigration changes. By leveraging Fragomen’s unparalleled experience in counseling multinational organizations and representing the business immigration community in global advocacy work, we determined that three drivers provide a framework for understanding recent immigration trends and making projections about the future: (1) Access to foreign talent; (2) Process change; and (3) Government enforcement and employer compliance.
The report consists of four parts:
The Regional Immigration Trends Analysis section provides insights and analysis of events that have taken place in 2019 and offer comments on future-state conditions.
The Key Themes section highlights recurring topics drawn from 2019 immigration events and offers projections for 2020.
The Key Emerging Trends section identifies four trends we believe will strongly impact the immigration landscape over the next several years.
The Strategies for Success and Risk Management section offers a ready-made checklist for high-level risk management and strategy planning to tackle key immigration issues. Employers should use this list and consider other factors in their workforce migration and planning decisions beyond those discussed here.
The Cypriot Data Protection Commissioner is compelled to appear before Parliament once more to urge lawmakers to place privacy protection above transparency as lawmakers debate whether to publish the names of CIP-applicants.
Perdikis gets back on the horse Greens MP George Perdikis has tabled a bill that, if passed, would see the names and other personal details of applicants to the country’s citizenship by investment program (CIP) published in an official Gazette. This is the second time in as many years that the center-left lawmaker attempts to compel the publishing of investors’ names. In April last year, he tabled a bill with the same objective, which parliamentarians ultimately rejected.
Data Protection Commissioner Irini Loizidou told MPs she opposed the bill on the grounds that it was a “disproportionate” measure that, when weighed against equally valid privacy considerations, must take a back seat to data protection.
“There may be some extreme cases [of applicants] which may not be ultimately approved, but it is possible that revealing those names could damage the public interest, the defense, the economy or the Republic’s international relations,” said Loizidou, according to the Cyprus Mail.
Perdikis’ draft bill is a result of long-standing pressure from European institutions – the European Commission, in particular – to increase transparency among the Union’s CIPs. In response, Cyprus has enacted wide-ranging reforms for its program, while Malta has gone so far as to publish the names of its new citizens.
It’s not the first time Ms. Loizidou has had to fend off attempts at divulging the data of investor migrants; in March last year, the Guardian illegally published a leaked list of names of participants in the program. Commissioner Loizidis acted without delay, ordering the original media report deleted and warned that she would respond to any further publication of the list by exercising her “authority provided by the law against media outlets that do so”.
Hoisted by its own petard
While the European Commission has been primus motor in the drive for CIP-transparency, it has been even more vehement in its demand for increased protection of individual data; Commissioner for Justice, Vera Jourova, played an instrumental role in bringing about the General Data Protection Regulation (GDPR). The same institution is now pushing for the flagrant disregard for data protection in the particular case of citizenship investors.
Loizidis, on Monday, argued that Cyprus was obliged to follow the guidelines of the GDPR when it comes to the disclosure of personal data, citing the regulation’s Article 5, which states that the collection and processing of personal data must be “adequate, relevant, and limited to what is necessary in relation to the purposes for which they are processed.”
Two politically tectonic plates are colliding; data protection and transparency. Which of the two will yield remains uncertain, but the irony of an EU member state now warding off one Brusselian decree with another is surely not lost on the European Commission.
The “it” is citizenship of a particular country, and it is a more fluid concept than ever before. Go back 50 years, and it was uncommon for countries to allow dual citizenship, but it is now almost universal.
More than half of the world’s nations now have citizenship-through-investment programmes. According to one expert, Swiss lawyer Christian Kalin, it is now a global industry worth $25bn (£20bn) a year.
Mr Kalin, who has been dubbed “Mr Passport”, is the chairman of Henley & Partners, one of the world’s biggest players in this rapidly growing market. His global business helps wealthy individuals and their families acquire residency or citizenship in other countries.
He says that our traditional notions of citizenship are “outdated”. “This is one of the few things left in the world that is tied to blood lines, or where you are born,” he says. He argues that a rethink is very much due.
“It’s super unfair,” he says, explaining that where we are born is by no means down to our own skill or talent, but instead “pure luck”. “What is wrong with regarding citizenship like a membership,” he adds. “And what is wrong with admitting talented people who will contribute?”
There are those who support his argument. But for many, the idea that passports, so tied to identity, are in some way a commodity, doesn’t sit well.
We followed the citizenship trail to the tiny Pacific island nation of Vanuatu. Since the country introduced its new citizenship scheme four years ago, it’s seen an explosion of interest. Passports now provide the biggest source of its government’s revenues.
For many aspiring Vanuatu passport holders, the biggest draw is visa-free travel throughout Europe.
Most foreign recipients of Vanuatu passports never even step foot in the country. Instead they apply for their citizenship in offices overseas, like the licensed Vanuatu citizenship broker PRG Consulting, based in Hong Kong.
Hong Kong is one of the world’s biggest citizenship marketplaces. In a cafe at Hong Kong airport, we met the citizenship agent MJ, a private businessman who helps an increasing number of mainland Chinese obtain a second or even third passport.
“They don’t feel safe [in China],” he says of his clients. “They want access to Europe to open a bank account, to buy property or to start businesses.”
Citizenship is a competitive global market, and for many small and island nations, notably in the Caribbean – the price for a passport is around $150,000. The cost of a Vanuatu passport is said to be around the same level.
How much does it cost to buy a passport?
Antigua and Barbuda; from $100,000
St Kitt’s and Nevis; from $150,000
Montenegro; from $274,000
Portugal; from $384,000
Spain; from $550,000
Bulgaria; from $560,000
Malta; from $1m
US; between $500,000 and $1m invested in a business creating 10 jobs
UK; from $2.5m
A Vanuatu passport, MJ explains, is “so fast” to arrange (you can get one in just 30 days), and that helps make it a popular choice. But Mr Kalin and others caution that Vanuatu has a reputation for corruption. As a result, Henley & Partners and others do not deal with the Vanuatu citizenship programme.
However, this doesn’t stop the interest from China. A few years ago Hong Kong television channels aired catchy TV advertisements promoting Vanuatu citizenship, aimed at the territory’s steady flow of visitors from the mainland.
So how many Chinese clients actually visit Vanuatu, after receiving citizenship? Maybe one in 10, guesses MJ.
Port Vila is the capital of Vanuatu, and a city of contrasts. The roads are often flooded and scarred with potholes. There’s not a single set of traffic lights, but congestion is worsening thanks to the growing number of shiny four-wheel drives.
It’s a tax haven, and recently rejoined the EU’s “blacklist” of countries, over transparency and corruption issues.
The country’s people – known as Ni Vanuatu – were only officially recognised as citizens themselves in 1980, when the country achieved independence. Previously it was an Anglo-French condominium called the New Hebrides, and the people are scattered over a daisy chain of more than 80 islands.
Less than 40 years ago, they were stateless. A fact not lost on former Prime Minister Barak Sope.
“I didn’t have a passport until 1980,” he says, sitting in a hotel and casino on Port Vila’s main road. “I had to travel with a piece of paper the British and the French gave to me. It was humiliating.”
Mr Sope says it is a “betrayal” for Vanuatu to sell its citizenship, and points to the flood of Chinese investment in the region. “The Chinese have so much more money than us,” he says exasperated.
The Chinese investment is criticised by locals such as Mr Sope, who complain that the Chinese companies keep all the money, and only employ Chinese labour.
Vanuatu’s all male government, one of only three countries in the world where women are entirely excluded from politics, was not keen to speak to us about its citizenship scheme. But we tracked down a government appointed citizenship agent, Bill Bani, who explains his take on the initiative.
“We have to look at Vanuatu on a global scale,” he says. “Other countries sell passports to make their living, we don’t have a lot of natural resources. It’s bringing in a lot of money to Vanuatu.”
But for the mainly rural population the policy has been highly controversial since its inception in 2015.
Anne Pakoa, a community leader, shows us around a typical village made up of corrugated iron shacks. It’s just 10 minutes’ drive down a dirt road from the shops and restaurants of the capital but feels a world away.
Anne says that local communities aren’t seeing the money from the passport sales, despite promises that the scheme would rebuild infrastructure and homes after the devastating Cyclone Pam in 2015.
“Our ancestors died for our freedom. Now people are carrying the same green passport I carry? For $150,000? Where is the money? I think this has to stop,” she says.
Susan, another woman from the same village, shows us a dirty well. “I want the government to provide a running tap, so that the children can have a shower, and drink clean and safe water,” she says.
ith demand from the Chinese market booming, Dan McGarry, who runs the local newspaper, says it will be hard to imagine a change in policy anytime soon.
Passport sales now account for more than 30% of the country’s revenue, according to Dan. “For a tiny country like ours this is a big deal. But we have to ask ourselves, is this what we fought for? Is this right? Is it right to sell our hard won sovereignty to the highest bidder?”
It’s a question that many countries, not just Vanuatu, will have to grapple with in an increasingly globalised world. But as Mr Kalin, from Henley & Partners, says: “Citizenship through investment, and investment migration programmes, are nothing but a reflection of a world where everything has become more fluid.”
As protests in Hong Kong intensified this summer, Mr Bernard Wolfsdorf, a Los Angeles immigration lawyer, anticipated “a new wave of immigration” to the United States. So he travelled to China and met regional immigration advisers.
They told him not to get excited.
“What I heard is, while many are leaving Hong Kong, the US isn’t the number one destination,” Mr Wolfsdorf said.
“The US is simply not seen as the most desirable option presently.”
When things go sideways around the globe, the US has traditionally served as an island of safety and security, particularly for the world’s wealthy.
The US is already home to more Hong Kongers than any country outside of mainland China, and recent data suggests more are looking to leave the city. Applications for a key emigration document, the “good citizenship card”, are up 54 per cent in the past year, according to official data.
But anti-immigrant political rhetoric, high-profile incidences of gun violence and impending changes to the “investor visa” programme have encouraged Hong Kong’s would-be emigres to consider alternatives such as Australia, Canada, Singapore, and Taiwan.
The street demonstrations, which raise fundamental questions about the future of Hong Kong, escalated this month with the shootings of two teenage protesters by police.
But even before the protest movement began, the US was losing lustre.
In a December survey by Chinese University of Hong Kong, one-third of the city’s citizens said they would consider leaving. Among them, the most popular destinations were Canada and Australia, with at least 18 per cent of respondents each, followed by Taiwan, at 11 per cent, and Singapore at 5 per cent. The US was the top choice for 2.9 per cent.
Australia is a favourite for clients of Mr John Hu, founder and principal consultant at John Hu Migration Consulting in Hong Kong. Advantages include a small time difference with China and mild climate.
Canada is also popular, Mr Hu said, especially for clients who want to follow family members who previously emigrated there.
Canada last year recorded its biggest influx of immigrants since 1913. Under Prime Minister Justin Trudeau, the country has aggressively wooed immigrants. Its Global Skills Strategy programme, for example, offering temporary work permits to applicants in as little as two weeks, has lured about 40,000 workers and their family members over the past two years.
Family ties make the US attractive. So does the EB-5 investor visa programme, which offers residency to anyone able and willing to make a US$500,000 (S$691,000) investment in a business or other project that creates jobs.
Applications from Hong Kong citizens are processed separately from investors from the mainland, which means that once an application is considered, it can often be approved with little, if any, wait.
The price of those visas is about to surge, however. Starting on Nov 21, the minimum investment rises to US$900,000, part of a reform of the EB-5 programme.
Even for those currently in the queue, a bureaucratic backlog means it can take years to get a visa. The US Department of Homeland Security has slowed its handling of paperwork to a crawl, making applicants wait years for an answer to their petitions.
The department was buried in 930,311 pending cases of all types at the end of June, government data show, double the number of pending cases from 2015.
The estimated wait for processing investor visas is at least 28.5 months, according to the US Citizenship and Immigration Service.
“EB-5 is not likely an answer to people in Hong Kong who say they need a quick exit strategy,” said Mr H. Ronald Klasko of Klasko Immigration Law Partners in Philadelphia.
“It will probably be at least three years before that’s going to get them to the US.”
People who don’t want to wait often find other ways to enter and stay in the US, including student and visitor visas.
“During these troubles, my clients have been in the US and Canada visiting,” said Ms Carolyn Lee, an immigration attorney based in Ithaca, New York.
A less-formal immigration status can also overcome another barrier daunting wealthy people who want to move to America: its unique and costly tax rules. For example, new immigrants must disclose all foreign holdings to the Internal Revenue Service, a level of scrutiny that many aren’t prepared for.
“Many of my Hong Kong-based are considering alternatives to the US,” said Mr K. Eli Akhavan, a partner at CKR Law in New York. “The tax bite can be quite heavy.”
Mr Hu, the immigration consultant, said American tax rules often take a backseat to quality-of-life issues for families considering the US.
“Hong Kong media’s frequent coverage of school shootings in the US has also made people worry about safety,” he said.
Another concern for some, he added, is that “racial discrimination is relatively serious in certain areas”.
Still, the US remains a popular place to do business, educate children, and park money. And even in the most stable times, the global super rich often see spreading assets around the world as an important way to protect their fortunes, said Ms Kathryn von Matthiessen, partner at Katten Muchin Rosenman LLP in New York.
“Most families I work with are looking to create dynastic wealth,” she said. “That means they have to manage political volatility and geographic volatility.”
Turns out money doesn’t just buy a glamorous vacation in the Caribbean or a killer suite in Quebec — it can buy residency too.
While British citizens are rushing to claim Irish passports ahead of the UK’s proposed Brexit on October 31, the world’s most elite travelers don’t bother standing in line at immigration counters.
Instead, they enlist in citizenship by investment programs (CIPs), where investing in a country’s economy can grant easy access to more powerful passports.
It’s a controversial but flourishing industry. On October 4, one of the most highly anticipated new programs, Montenegro, announced that it was accepting applications.
This little Mediterranean nation, known for its dramatic mountainscapes and scenic coastal towns, is offering 2,000 applications the opportunity to pocket a passport.
The cost? Applicants need to invest a minimum of $274,000 in development projects.
They must also pay a fee of 100,000 euros per application, which will fund growth in underdeveloped areas.
“Generally CIPs draw individuals from countries whose passports offer very limited abilities to travel, such as China, Russia, and Middle Eastern countries,” Nuri Katz, founder of international financial advisory firm Apex Capital Partners, told CNN Travel in 2017.
“Most of the individuals making these types of investments are high net-worth entrepreneurs with net worths of about $2- to $15 million.”
How CIPs came to be
London-based Henley & Partners citizenship planning consultancy named Japan and Singapore the most desirable passports in the world in its 2019 Passport Index thanks to their visa-free or visa-on-arrival access to 190 jurisdictions.
For those holding a less coveted passport, CIPs offer an alternative.
The legal framework enables foreigners to acquire door-opening passports by making large financial contributions, usually in infrastructure development or government bonds.
The concept began in 1984, when St. Kitts and Nevis — a two-island nation in the Caribbean — introduced the original CIP. The practice became more popular in 2009, when the country began heavily marketing its opportunities.
“The St. Kitts and Nevis program is the oldest in existence, so it is considered to be the platinum standard,” Katz said.
“There are lots of CIPs in the Caribbean, because they simply need the money and don’t have many other resources that they can use to attract foreign direct investment.”
Over the years, such programs have become more standard in developed countries as well — the United States, Canada and the United Kingdom offer versions, as do a few countries in Europe.
Austria, Antigua and Barbuda, Malta, Cyprus and Dominica all actively market versions of CIPs and, Katz said, “Many more countries are considering adopting such programs. For example, Georgia and Kazakhstan are working on creating programs, and several other countries in the Balkans are considering them.”
How it works
In 2017, Katz estimated that around 5,000 people per year were acquiring citizenship abroad through CIPs.
Katz himself is one of them. Originally an American citizen, the entrepreneur acquired citizenships in Israel and Canada where he lived for long periods. Later, he obtained a St. Kitts and Nevis citizenship through a real estate investment.
He is also a citizen of Antigua, because he purchased a home — where he now resides with his family.
“I pursued citizenship in Antigua because I found a good school there for my son,” he says.
“When I bought the house, I realized that attaining citizenship was a smarter decision than getting a residence permit that would require constant renewals.”
It might seem easy to shell out the money and stock up on passports, but the rigorous application processes can take months — if not years.
Typically, applicants will undergo thorough financial and criminal evaluations to ensure the money has been earned legally, prior to residency or citizenship being approved.
Perhaps unsurprisingly, the US CIP program is among the most difficult to obtain. Applicants must fulfill a five-year residence requirement before being eligible to apply for citizenship — which is not guaranteed.
“All nationalities are eligible for the investor immigration program in the US — most applicants are from China, but many are from Iran, Nigeria, Russia, Mexico and Egypt,” says Katz.
“It can take years for residency to be approved.”
The best passports
CIPs range from $100,000 in the island of Dominica to a minimum of $2.15 million in Cyprus — and the best passports, in terms of mobility, tend to be the most expensive.
“Cyprus is among the most expensive for a number of reasons. For one, the right to live in Europe is considered to be of high value,” explained Katz.
“Additionally, the investment in Cyprus is in real estate and there is a feeling amongst investors that the Cyprus real estate market is well priced and that investing there can lead to good returns.”
The Mediterranean nation is also prized for its easy access to EU residency, quick processing times and relatively fuss-free documentation.
Other popular passports include Portugal, where the country’s Golden Visa Program provides a two-year residency permit and a fast-track to citizenship, extending the courtesy to immediate family.
The fee? Wannabe residents must purchasereal estate valued at $550,000 (or $384,000 reduced option, which means investing in approved real estate that requires renovation).
Meanwhile, countries such as Antigua and Barbuda, in the Caribbean, are cheaper — with just a $100,000 contribution into its National Development Fund required.
Why do it?
If you’re already scoping property in Cyprus or Portugal, a CIP is like a two-in-one deal.
You’ll walk away with a chunk of ownership in a new five-star resort, as well as a new passport.
There are professional benefits as well. A business traveler with a politically problematic passport might not have time to waste waiting weeks, or months, for expensive visas to be approved.
Instead, he or she might feel it’s a worthwhile investment to purchase $560,000 in government bonds in Bulgaria and enjoy seamless travel to 170 jurisdictions — in turn making travel significantly more efficient.
“Business travelers need the ability to be highly mobile and not be restricted by requesting visas to all the countries that they need to travel to,” said Katz.
“For example, without ease of travel, a Chinese person who needs to go on business to Paris and London must first go to the French embassy and request a visa, and then to the British embassy to do the same thing.”
Keeping options open
For US passport holders, for example, a second passport might come in handy if an American is traveling to an unstable country or desires to live and work in Europe.
Americans can hold multiple passports, but if they want to avoid US taxes — or double-taxation, for those living abroad — they must renounce their citizenship.
“Many find it frustrating that America taxes its citizens even if the person lives abroad, making it one of only two countries to do so,” said Katz. (Etrirea is the other one.)
“Taking on an alternate citizenship allows you to give up American citizenship and stop paying taxes.”
Likewise, wealthy families with a restrictive Middle East passport, for example, might choose to invest in a passport from Dominica so they can save time and travel the world more freely.
Or they might consider the investment a sort of security blanket — a back-up plan in case of sanctions, war, or natural disasters.
“It’s considered somewhat of an insurance policy among the many high-net-worth individuals who believe in both financial diversification, as well as diversification in terms of citizenship,” he adds.
“It is something that gives a certain amount of protection against a dark day that could one day occur.”
The ultimate status symbol
There are some who simply collect passports like they would any other status symbol, from cars to summer homes.
“It shows that one has reached a certain financial level that allows them to invest in a second citizenship,” said Katz.
“Like buying an expensive car, it serves a purpose but it also shows that one can afford it.”
The only high-net-worth group who’s not collecting passports? Billionaires.
“Billionaires usually will have taken care of these issues when they are still ‘simple’ millionaires,” said Katz.
“It is generally something that they start thinking about when they reach a net worth of a million or two.”
The price of CIPs
The upsides of CIPs provide economic support for capital-starved countries and personal perks for investors. But they’re not without controversy.
Kate Hooper, an associate policy analyst at the Washington DC-based think tank Migration Policy Institute’s International Program, says the mixed reception of these programs involves a government’s commitment to tracing income sources.
“The exact due diligence procedures tend not to be publicly disclosed, and numerous reports have raised concerns about how effective these processes actually are at screening people and rooting out dirty money,” says Hooper.
“Over the years, there have been a handful of cases where citizenship has been granted to people without proper screening.”
Another issue, she says, is that CIPs put a clear price on residency rights.
“For example, the optics of selling EU citizenship prompted the EU to oppose Malta’s CIP when it was introduced, only backing down when Malta agreed to add a number of additional conditions on granting citizenship, such as minimum residency requirements.”
Unintended side effects
Some experts also express concern about economic and political side effects.
George DeMartino, a professor of international economics and ethics at the University of Denver, suggested CIPs could cause unintended side effects.
“These programs do not ensure a win-win solution to the problem of capital scarcity in poorer countries,” DeMartino said in a 2017 interview.
“They are just as apt to represent beggar-thy-neighbor strategies — and this problem is exacerbated when the country with the CIP is relatively wealthy and the investors come from relatively low-income countries,” said DeMartino.
There is also a potentially more serious problem, he says, which involves politics.
“Programs such as these threaten to diminish political fraternity by affording special privileges to the already privileged,” explained DeMartino.
“They permit those with the least need to migrate and achieve citizenship in a new country the greatest opportunity to do so, while those far more desperate to migrate, such as those facing dire economic circumstances at home, are fully excluded from the benefits of these programs. The programs are not the cause of this inequality, but they amplify it.”
In June this year, the Investment Migration Council premiered an industry first: a certification program for industry practitioners – current and prospective – aimed at instilling high ethical standards and subject matter competence among professionals.
Scandals and instances of malpractice in the industry surface at regular intervals, and practitioners who take a cavalier approach to business harm the entire market’s public perception. Even in instances where no tangible malfeasance is documented, investigative reporters tend to frame RCBI-businesses in unflattering ways by making the most out of initially meager raw material. The IMC hopes the promulgation of best practices through its course will serve to reduce such cases in the future.
Some 50 students are currently enrolled in the course – officially, IMCET – of whom three have already completed the coursework and passed their exams to obtain “professional” status memberships with the IMC. Feedback so far, according to the organization itself, has been largely positive.
“The students are enjoying the course material and they believe that it will help them in the way they do business within this industry,” says Marie Lou Cutajar, the IMC’s Education and Training Administrator, who describes the course as “a ground-breaking initiative designed to prepare participants for work in a new and vibrant industry where high professional standards, values, and enhanced competencies are required.”
Jusztina Rebeka Juhasz, who has completed the course and obtained her certification, highlights the program’s focus on due diligence and EU regulations as integral to its usefulness. “It includes the key learning elements that people simply are not picking up anywhere else,” she comments.
Roleece Brooks, another graduate, believes IMCET should be mandatory for residence and citizenship by investment professionals.
“The use of examples and case studies were very helpful in grasping the material,” she says, and describes IMCET as “quite detailed, especially given the addition of essential and further reading”.
The coursework, which consists of five modules, generally takes 25-30 hours to complete, upon the completion of which students are assessed by a two-hour exam of 100 multiple-choice questions.
“The course is designed in a way that enables you to study at a time and in a format that works for your lifestyle, as it can be accessed through an application on mobile phone or tablet,” explains the IMC’s administrator. “There is no specific start date for the course, as whoever enrolls in the course will have access to their unique user account where all course material will be available for them at any time,” she adds, also pointing out that government agencies are now enrolling their staff.
Wealthy Hong Kong citizens are increasingly on the hunt for new passports as protests drag on and cast a cloud over the territory’s future.
Many countries run visa schemes that offer resident or citizenship rights in exchange for sizeable investments.
Several migration firms have reported a spike in interest from Hong Kong for these visas since the unrest began.
They say with no resolution in sight, residents are seeking “insurance”.
Protests in the territory began in June, sparked by a proposed law that would have allowed extradition from Hong Kong to the Chinese mainland.
Despite the bill being withdrawn, demonstrations have continue to rock the city for months and show no immediate sign of abating.
Hong Kong’s protests explained
How business is navigating Hong Kong’s new reality
Against that backdrop, various immigration agencies told the BBC they have seen a sharp rise in interest from Hong Kong residents in investor visa programmes.
These programmes exist all over the world, with Europe and the Caribbean particular hubs. Typically, countries require the purchase of property, government bonds or a set donation to secure a visa.
The minimum investment varies greatly – from a $100,000 (£81,200) donation in Antigua & Barbuda, to around €2m (£1.8m) in real estate investment for Cyprus.
Buying ‘insurance’
Hong Kong-based John Hu Migration Consulting has seen a four-fold increase in sales and inquiries from locals about visa programmes since June.
Founder John Hu said recent unrest in the former British colony had been the “catalyst” for the rush.
“As the protests become more violent and it seems that the government is not doing much to resolve the current situation, they have the urgency to buy insurance,” he said.
Enticed by the freedom of movement within the EU and minimal residency requirements, Mr Hu said most are drawn to European programmes including Ireland, Portugal and Malta.
The firm has carried out more than 30 new visa applications for Ireland since the protests began, requiring a minimum donation of €500,000 or €1m euros invested into an Irish enterprise.
Another immigration consultancy, Arton Capital, says inquiries from the territory have “more than doubled since the protests started”.
“Portugal is very much in favour in Hong Kong because of the relatively cheap real estate… real estate prices in Hong Kong are sky high,” according to Philippe May, head of Asia Pacific for Arton Capital.
Mr May said that while clients do not share their reasons for interest in the programmes, “it is very obvious that it is the most recent developments in Hong Kong which caused them to look again at their Plan B”.
Are visas losing their sparkle?
Overall take-up of visa programmes remains small – Arton Capital processes up to 1,000 applications each year – as they target only the wealthy.
Still, Hong Kong has plenty of eligible candidates. The Asian financial hub is a hotbed for the rich, and was home to 179,000 millionaires in 2018 according to Credit Suisse.
Hong Kong ranked 15th in the investment bank’s latest list of countries with the most ultra-high net worth individuals.
Protests in Hong Kong are not the only factor luring residents to visa programmes.
Advisory firm Henley & Partners has also seen a jump in Hong Kong-based inquiries into investor visa programmes since the outbreak of unrest in June.
The firm’s public relations director, Paddy Blewer, said the spike comes “as the protests in the city escalate, and as uncertainty about the future persists”.
“Compared to last quarter… there has been a 260% rise in interest from Chinese nationals or investors resident in Hong Kong.”
But, he adds, domestic issues are only part of the story.
Many Hong Kong clients seek out residency or citizenship programmes for the same reasons any other applicant would, Mr Blewer said, such as opportunities to travel, invest in another country or study abroad.
“They are looking to access finance, they’re looking to invest wherever they want, live wherever they want.
“They want their children to go to other universities… to access the rest of the world.”
