Due Diligence for a smooth running of Citizenship by Investment Programmes

"Due Diligence" is one of the most familiar words with the people seeking or investing in any economic citizenship investment programme of any nation.

Due Diligence for a smooth running of Citizenship by Investment Programmes

Caribbean: “Due Diligence” is one of the most familiar words with the people seeking or investing in any economic citizenship investment programme of any nation. It is wholly responsible for the success or failure of any such programme. The factor is currently becoming a disadvantage for the nations with improper vetting procedures for the seekers. 

Having a solid due diligence system, the Caribbean region sets up an example for the rest of the nations across the world, which are in the queue to run citizenship by investment programmes to high-income individuals.

Numerous Caribbean nations offer Citizenship by Investment programmes to the citizens seeking citizenship of any country by economic means. Such due diligence systems are carried out by third-party firms such as UK’s FACT, US’s Thomson Reuters, and many other renowned agencies. 

Extra fees must be paid to the government agencies for due diligence during citizenship application.

To provide a safe and secure future to applicants who opt for investment based citizenship, the Caribbean region offers multi-tiered service in terms of due diligence in their programme regulations. Below is the list of such regimes-

  • Background Check– A background check is the most initial stage of the process that allows a person or a company to cross-check any individual seeking citizenship by investing an amount. It further allows to check and validate the accuracy of applicant’s background criminal records, education, job or business history and other activities related to a person’s background. Checking background differs from region to region, country to country and from individual to individual. It is usually done when someone applies for economic citizenship. These checking is done by using different ways, including a complete search and scrutiny of every document. It further involves checking any anti-terrorism activity, financing, or money-laundering activity before giving the green light to any applicant.
  • Source of Funds: It is also considered the vital part of the due diligence process and further refers to the funds that citizenship applicant uses for the purpose of the transaction. This is the sole purpose of checking from “where did the funds or the money used for transactions is coming from.”
  • Criminal Record– It is another vital part of the process. Criminal records are checked to ensure whether that applicant was involved in any illegal activity or any legal case in the past. In some cases, it also requires police verification. 
  • Visa Refusal: If an applicant’s application is rejected by any nation providing visa-free access via Citizenship by Investment, will not be allowed to become a citizen of any Caribbean country. The application will either get rejected during the vetting process.

All the checks are conducted by special agencies who carry out free and fair due diligence on citizenship applications where numerous agencies are involved, including Inter-governmental agencies, Interpol, joint regional communication Centres and partners in other nations such as Canada, US, UK and several others. The waiting procedure involves the form of band nationality policies- by excluding people nations where due diligence cannot be performed with accuracy.

For instance, people who visit European nations apply for citizenship or find jobs, but in terms of seeking citizenship by investing an amount, it is not an option as single application costs over $150,000, which is not everyone’s cup of tea. Most people who have obtained economic citizenship visit Europe for travelling purposes or shopping purposes, which will eventually help the country’s economy. Moreover, it is said that the vetting process carried out by Thomson Reuters and FACT and other similar agencies are more stringent than any other agency’s check carried out by the government itself, whether it is for visa application or citizenship application.

Vanuatu’s Economic Citizenship programme

Recently, the European Commission has criticized Vanuatu’s economic citizenship programme as it proposed on January 12, 2022, for suspension of visa-free travel agreement because of its inter-governmental due diligence of applications. All persons who have received Vanuatu’s passport will not be permitted visa-free travel to European countries. As per the EU executive, the nation’s vetting system was considered risky and lacked sufficient screening during applications.

Meanwhile, the government of Vanuatu has still the chance to clear its image and calm the actions by the EU commission against their economic citizenship programme by updating their due diligence procedures and conducting rigid vetting of all applicants who are the recipients of the citizenship since May 2015.

FACT Due Diligence:

The UK based organization employs over 150 police officers from Scotland Yard, FBI and Interpol. They are expertise in checking and verifying applicants’ information both online and in-person and ensure that all applicants meet the standards or not.

In April 2019, many Caribbean countries as part of a research conducted by Smith and Williamson, a financial services company in the United Kingdom. The study titled, Citizenship vs Residency: The Taxation Implications of Citizenship by Investment Programs checked upon the tax consequences for a person participating in the Citizenship by Investment Program.

The complete study conducted by Smith and Williamson concludes that the Citizenship by Investment program poses no threat to the country or jurisdiction that had taxed the application before becoming an economic citizen.

The Caribbean region’s due diligence structure has set up an example across the globe that must be followed by the UK, Greece, Portugal, and several other nations as well.

Steps of obtaining Citizenship by Investment in the Caribbean:

  • The most prior thing is to select a Government approved agent to proceed with the citizenship application.
  • The another most important element to consider is that applicants must stay in touch with their agents and provide the necessary documents.
  • All persons who are part of the application are vetted in complete due diligence background checks. (Third Party firms will ensure whether the person is passed in due diligence or not).
  • Payment and required certification of citizenship.