The Due Diligence (DD) practices have existed in the CBI industry for over 30 years and we still apply those experiences learnt over several decades in vetting of applicants. We are still learning, improving and evolving. Over 90% of the work in CBI applications, spent on due diligence and background checks on every family member.
Criminals are evolving too! They are increasingly becoming smart and plan well ahead of time, and they expose weakness in DD system.
The recent Choksi case has shook the investment migration industry to its core and has damaged the reputation of the industry. Choksi was granted Antigua citizenship under the CBI program.
It has emerged Modi first applied for Vanuatu and he was denied, after the Vanuatu Financial Intelligence Unit of Government found adverse report and refused of citizenship. His agent returned the payment. Modi is the maternal uncle of Choksi, both are fugitives, accused of swindling millions from a bank and on the run.
Had Modi applied for Antigua and received citizenship, it would be a completely different story. Antigua cannot be blamed, despite doing due diligence on their part, it is with the system or framework which is not in place.
Antigua would not have known that Vanuatu denied him citizenship for failing due diligence and his application is refused for high risk.
There is still no co-operation between Citizenship by investment Units (CIU) – forget blockchain, not even a single database exist on denied high-risk applications. There is no integrated system or framework in place for data sharing, so that one applicant is refused in one CBI country, they cannot apply for others.
Malta is a textbook example when it comes to Enhanced Due Diligence (EDD) practices and one in four applications are refused. With Caribbean CIP’s one in 10 applications are refused.
Saint Lucia is also taking due diligence very seriously among Caribbean CIPs. According to CIU Boss, St Lucia is taking enough time to verify applications and will not issue citizenship until DD checks are passed.
The World Citizenship Council (WCC) is proposing the following recommendations to Governments and CIUs to protect the integrity of the CBI programs from abuse and fraud..
1. CIU’s must cooperate and share risk data of applicants including denied applicants. This way if application is refused by one country, automatically refused by others.
2. Citizenship Agents must also share client data on who they suspect high risk and refused accepting them. This way greater harmony exists between consultants/agents and if the client approaches with another agent, he/she will know the problems and risks associated with clients. Agents should not hesitate to hire the services of third party due diligence companies, to mitigate the first layer of risk before passing over the file to CIUs.
3. CIUs must take plenty of time, atleast six months to finish due diligence checks and must not rush into approving applications without extensive due diligence clearance and must not cave in to pressure of massive pending applications. Sometimes slow is better, by prolonging the time, it creates a smoke screen for risky clients who are desperate to get passports within 3 months. No passports should be issued within 6 months. For example, EB-5 has 22,000 pending petitions.
4. Blockchain is the public ledger technology can be used for sharing of risk data between CIU’s. It is tamper proof and sensitive data of applicants must be encrypted on blockchain only shared between CIUs with cryptographic keys.
5. Malta has developed a CBI risk matrix which predicts the risk of applicant, when data is fed into machine learning model. A similar CBI Risk matrix is needed for the entire industry and all countries running CIPs must feed data into it for predictions. The more the data is fed from countries (not just CBI but also data from Golden visa countries), the matrix will be accurate.
6. Malta and Cyprus require applicants in soil and imposed residency requirements before acquisition of citizenship. Antigua imposes 5 day requirement to visit the country within 5 years. All other CBI countries do not require new citizens to visit the country. We recommend atleast 3 day requirement to visit the country for tourism/business so that one know where the country is on the map, before receiving passport.
7. Agents must be very careful in taking clients from sanction countries especially under OFAC or EU sanctions. Dual citizenship holders could also hide their real nationality which could be from a sanction country. For example, Iranian nationals, for example, cannot give up their nationality: it is not legally possible. In Morocco giving up nationality is not accepted in practice.
8. Real estate applicants who invest high amount of money, over $400,000 needs a closer look over their background. Choksi and dark web mastermind, allegedly purchased real estate for citizenship.
9. Agents to be compensated with increase in commissions for referring highly qualified applicants and their families. Commissions per family case $30,000 for caribbean programs and $50,000 for european programs.
10. Splashing a passport with address outside of the country, proves no ties to the country. Caribbean CIP’s with donation options are issued with passport with domiciled address in a foreign country. Imagine at passport control, the immigration officer looks at a passport the passport country is different, domiciled address is another country and the person’s appearance is another country. This raises red flag and CBI passport holders may be subjected to further scrutiny at the border. There it is very important for economic citizens, to be given a passport with specific ties to country, such as living there (renting or owning a real estate) so that it comes with residential address.
Therefore we propose Governments to include renting or buying a real estate option in addition to donation option to qualify for citizenship
- Donation to National fund ($100,000) and
- Rent a property ($15,000 per year) or Buy a real estate ($100,000) for residential address.
Both conditions must be satisfied. This prove a genuine link to the country, also a valid reason to qualify for passport. This also boosts real estate sector, tourism and business sectors.
11. Increasing number of criminals are looking for a way to change their name, before and after receiving CBI passports. This should not be allowed. The place of birth is one field that never changes and must be printed on all international passports.
12. Marketing and promotion of CBI schemes must be limited in countries where dual citizenship is not allowed. Some countries like China, India does not allow carrying multiple passports and prohibits dual citizenship. Russia and South Africa require prior permission before acquiring a foreign nationality. In Russia not reporting within 60 days is a criminal offense. Prospective clients must be told clearly issues with dual citizenship regulations before acquiring a CBI passport.
13. Agents must only refer highly qualified applicants (low risk) to CBI programs and must take their time to do initial or preliminary due diligence checks. Agents referring high risk/unqualified applicant families to citizenship schemes receive application refusals from CIU’s. This wastes lot of time and money and also receiving large number of application refusals hurt the reputation of agent with the Government.
14. Given that more than half of the applicants for CBI schemes from china, these applications need a closer look on source of funds. Applicants from India needs a close attention with number of fugitives fleeing from India are on the rise.
15. The European Union is enforcing electronic visa waiver authorisations (ETIAS) effective from 2021. All visa waiver visitors to EU schengen states (except schengen visa holders, EU citizens, residence permit holders) will need to register for ETIAS authorization before commencing travel to Schengen area. It will cost 7 euros and all citizens and economic citizens from Caribbean countries with CIP’s will be subjected to this requirement.
The ETIAS will check against the following criminal databases before granting approval..
When verifying and assessing the information submitted by visa-exempt travellers, the system will automatically cross-check each application against:
- Existing EU information systems:
- Schengen Information System (SIS),
- Visa Information System (VIS),
- Europol data,
- The Eurodac database,
- Proposed future EU information systems:
- the Entry/Exit System (EES),
- Interpol databases:
- the Interpol Stolen and Lost Travel Document database (SLTD),
- the Interpol Travel Documents Associated with Notices database (TDAWN),
- a dedicated ETIAS watch list and specific risk indicators.
- Pending the approval of the Commission’s proposal to exchange information regarding criminal records in the EU to third-country nationals (ECRIS-TCNs), ETIAS should in the future also be able to query ECRIS-TCNs.
Countries with CIP’s may risk visa waiver with EU if large number of denials received for CBI passport holders from one countries. Therefore it is very imperative for CIU’s to upgrade their due diligence systems for enhanced vetting of applicants before 2021.