The Laundry Man by Kenneth Rijock ( Penguin/Random House UK)

Tuesday, July 14, 2020

EAST CARIBBEAN STATES HOLD A FIRE SALE ON CBI PASSPORTS; THE EFFECT ON DUE DILIGENCE IS TROUBLING



The news that most of the East Caribbean States that offer Citizenship by Investment (CBI/CIP) passports have greatly reduced their fees, some to only $100,000 for a family of four, is not good news for compliance officers. The minimum amount of due diligence on applicants, CBI units charge for, and allegedly outsource, will obviously now be far less, if it is conducted at all. Remember, the CBI consultancies, and the countries themselves, build in substantial agent fees, which will definitely not be drastically reduced; the lower fees therefore will result in major cuts elsewhere, which can only be in compliance matters.

The other obvious downside is that the CBI passports will now be available to a less successful class of white-collar criminal. Previously, the passports, which known criminals and sanctions evaders employ, complete with aliases and new nationalities, were expensive. Now, with the price reductions, just about every fraudster and money launderer can afford to obtain one of those effective tools to disguise their identities, and arrive at international airports of entry under a clean identity, making them effectively immune from arrest on pending wants and warrants.

We trust that the compliance industry will see this an an opportunity for rank-and-file white collar criminals to secure CBI passports, and even possibly acquire more than one, under different aliass, while they are at it. Remember, what we learned in the Ali Sadr Hasheminejad case is that he had miltiple CBI passports, all issued by St Kitts, all under different names, and he used those to covertly set up effective money laundering pipelines to Switzerland, artfully concealing his Iranian nationality from Swiss corporation service agents. Also, expect that CBI consultants may now steer their  less wealthy clients away from Malta and Cyprus, which they may now balk at paying for, and towards the cheaper East Caribbean jurisdictions.

Will we now see even more white collar criminals arrested abroad, all holding that prized East Caribbean CBI passport, issued by St Kitts & Nevis, Dominica, Antigua & Barbuda, Grenada and even St Lucia ? What do you think ? 

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