Regardless of the country’s demographic situation, due diligence is one of the most important components in the success or failure of any economic citizenship programme. This factor is now affecting countries with or without adequate candidate vetting procedures.
The Caribbean countries offering economic citizenships has a multi-layered due diligence procedure. Their model serves as a guide to all countries throughout the world that offer similar citizenship programmes to high-net-worth individuals.
Countries offering Citizenship by Investment Programme (CBI) in the Caribbean follow strict due diligence procedures carried out by third-party businesses such as FACT in the United Kingdom, Thomson Reuters in the United States, and a variety of other reputable companies agencies. The government charges a cost of around $7,000 for citizenship applications.
The Caribbean region has led the way in upholding multi-tiered due diligence processes to offer a safe and secure future for persons who opt-in for economic citizenship. These regimes include the following:
1. Background Checks – A background check is a method that allows a person or company to verify that someone is who they claim they are by examining and validating the accuracy of that person’s criminal record, education, employment history, and other past activities. Background checks’ frequency, purpose, and legitimacy differ based on the country, business, and applicant. When someone applies for economic citizenship, they are frequently subjected to a background check. These checks are conducted through various methods, including a thorough database search and personal referrals from reputable firms. Before approving any applicant, global anti-money laundering and anti-terrorism financing checks are performed.
2. Source of Funds – This is also part of the due diligence procedure and pertains to the funds utilised by the citizenship applicant for the application transaction. This procedure’s main purpose is to determine “where did the money for the transaction come from.”
3. Criminal Record – If the applicant has been involved in any criminal behaviour in the past, his or her criminal record is reviewed, which may include police validation in some situations.
4. Visa Refusal — If a person’s visa application is denied by a nation that offers visa-free entry through Citizenship by Investment, that person will not be allowed to become a citizen of any Caribbean country under the CBI Programme. Not only that but their application will also be rejected in the vetting process.
All of these checks are performed by specialised firms that conduct independent due diligence on citizenship applications. It involves several agencies, including intergovernmental agencies, INTERPOL, the Joint Regional Communication Center, and partners in other countries such as the United States, Canada, the United Kingdom, and others. The waiting procedure can also take the shape of band nationality restrictions, which keep people out of nations where accurate due diligence is impossible.
People who visit European countries may apply for asylum or find work, but in the case of economic citizenship, this is not a possibility because a single application costs over $150,000, which is out of reach for the average person around the world. The majority of those who have earned economic citizenship are either visiting Europe for vacation or shopping, which will boost the country’s economy in the long run. Furthermore, it is claimed that the vetting techniques used by FACT or Thomson Reuters are more rigorous than any government-run assessments, whether it is for a visa or citizenship application.
Economic citizenship in Vanuatu
The European Commission (EU) recently criticised Vanuatu’s economic citizenship programme. EU Commission, on January 12, 2022, proposed to suspend the visa-free travel agreement owing to its inter-governmental due diligence of applications. All Vanuatu passport holders who got their passports after May 2015 would be denied visa-free travel to European countries. The country’s vetting procedure, according to the EU executive, was deemed dangerous and lacked appropriate screening during the application process.
The government of Vanuatu, on the other hand, still has a chance to mitigate the EU commission’s measures against their economic citizenship procedure by creating a strict due diligence mechanism and completing thorough vetting of all applicants who have gained citizenship after May 2015.
Due Diligence by FACT
FACT has the knowledge and experience to thoroughly check and verify applicant information both online and in-person, guaranteeing that all applicants meet the requirements for obtaining a new nationality. Over 150 police officers from Scotland Yard, the FBI, and Interpol work for the UK-based firm, which conducts due diligence checks on its clients.
Besides that, research released in April 2019 by Smith & Williamson, a financial services organisation based in the United Kingdom, highlighted various Caribbean countries. Citizenship vs Residency: The Taxation Implications of Citizenship by Investment Programs was research that looked at the tax implications of someone who participated in a Citizenship by Investment Program.
According to Smith & Williamson’s extensive study, the Citizenship by Investment Program has no detrimental impact on the country or jurisdictions that taxed the individual prior to his economic citizenship.
“Smith & Williamson believe that citizenship by investment does not pose a risk of facilitating tax evasion,” the researchers explained, noting that “citizenship alone is insufficient to secure tax residency of a country, and an individual is only liable to tax in countries where they are tax resident, subject to an existing double taxation treaty.”
The Caribbean countries’ effective economic citizenship due diligence structure is a model that the UK, Greece, Portugal, and many others should emulate.
Steps to obtain economic citizenship in the Caribbean
1. Choose a government-approved agent to help you apply for citizenship.
2. Applicants must contact their agent and give the necessary documentation.
3. A complete due diligence background check is performed on everyone who is included in an application. (In due diligence, third-party firms will certify if the person is clear; otherwise, the application would be rejected.)
4. Payment and citizenship certification