Stricter Measures Required for Caribbean CBI Programs to Prevent Investment Mismanagement

After MSR Media’s Philippe Martinez filed a RICO lawsuit against several distinguished individuals associated with citizenship by investment industry in the Caribbean, there has been a wide conversation about the misuse of funds by some of the developers.

Following the allegations by Martinez, the governments of St Kitts and Nevis, Saint Lucia have been quick to react, and are now reviewing CBI applications to check if any recipient got citizenship at a price lesser than the actual cost.

Investments getting parked elsewhere

Citing the ongoing fuss about the developers parking the investments elsewhere, a Wealth Migration Expert, Mohammed Al Qassimi from Dubai expressed his views. In a deep conversation, he explained how such CBI Investments are now being money laundered by one or two developers, as the investments are not reaching their destinations (the country that granted citizenship).

Qassimi, explaining the situation in a more comprehensive manner, described it with an example. For instance, if XYZ Hotel is getting constructed in Grenada, and an individual from Nigeria qualifies for Grenada citizenship by investing in the project, then he/she must make an investment, presently the amount however is not directly credited to a local bank account in Grenada, but it is shifted to the account managed by the developers. This could be a bank account in the UAE, China, Singapore or anywhere else in the world, instead of being in the host country.

In such a situation, the Grenada government will have no authority to confirm, if the funds were actually credited, or if the investment was done according to the government norms.

Government’s unable to keep a track

This practice is being done by one or two developers at present, creating challenges for the government to keep track of the investments coming from the CBI applications. The lack of bank accounts in the home countries is enabling the developers to do massive cost cutting of the CBI applications, leading to a major fiasco in the system.

Handling the challenge

The experts believe that this challenge can be handled immediately if each CBI offering jurisdiction in the Caribbean appoints two signatories from the Government, and two from the developer’s side to initiate the process to receive the investment, this would allow the CBI offering countries to keep a check on the investment amounts and if they actually reached the country. (or developers can also use escrow accounts with professional body).

Also, the citizenship shall only be granted if the money is credited and verified to the bank account of the developer in the host country.

Client Vigilance

In such cases, it is of high importance that the applicant who qualifies for citizenship must verify where they are transferring their money.  The applicants must ensure that their investment is being directly credited to a bank account in the host country, and not elsewhere in the world. Otherwise, this opens a major pathway for money laundering, if not done in the right way.

It is noteworthy that Prime Minister of Dominca, Roosevelt Skerrit and St Kitts and Nevis, Dr Terrance Drew have already made announcement that the respective governments are reviewing previous citizenship by investment applicants.

According to their statement, if any individual is found to have obtained citizenship below the minimum investment threshold, their citizenship will be revoked. “With or without the lawsuit, I am, and always have been, prepared to take the necessary statutory steps under the Citizenship Act to protect our Federation’s good name and revoke citizenships obtained by fraud,” said Dr Terrance Drew.