THE CITIZENSHIP BY INVESTMENT INDUSTRY FACES A PERFECT STORM FOR CHANGE AND REFORM

Jurisdictions that offer Citizenship by Investment (CBI/CIP) passport sales programs have been rocked by two significant events that will impact and challenge the industry in ways which will either result in meaningful change and reform, or threaten its continued acceptance by a financial world that will no longer tolerate the abuses which have long tarnished its reputation.

The filing of a major RICO lawsuit in the United States, alleging systemic corruption in the CBI operations of two East Caribbean states, together with new EU regulations that require vendors and agents of its citizenship and residency products to maintain effective and robust AML/CFT programs, combine to require reform in ways that the industry has not heretofore been required to make.

In the first instance, the inevitability of additional suits challenging corruption in other CBI jurisdictions has already resulted in meaningful government action to head off such threats in more than one jurisdiction. The second issue, which resulted from the widespread abuse of CBI passports by individuals engaged in criminal conduct, should give rise to more responsible administration by private vendors servicing applicants. Those agents who cannot or will not change their conduct will not have a future in the industry, which provides a valuable service to legitimate applicants who have unfortunately been stigmatized when bad actors are allowed to engage in abuse.

As a longtime critic of the CBI industry, we hope that these reforms can result in meaningful change, to eliminate those problems that have plagued it, and create a lawful environment where trust is reestablished in the financial and law enforcement sectors that have been impacted in the past.There is a need for it products by the public, and we trust that this will continue to be served.