In recent years we have seen a growing trend in the EU in investor citizenship (“golden passport”) and investor residence (“golden visa”) schemes that seek to attract investment by granting investors citizenship or residence rights of the country concerned.
These schemes have implications for the European Union as a whole, as every person holding the nationality of a Member State is at the same time a citizen of the Union. Even though these are national schemes, they are openly, advertised as a means of acquiring Union citizenship, with all the rights and privileges associated with it, including the right to free movement.
Golden Passports and Criminal Activity
Such schemes have raised concerns about the risks and some Member States have recently faced serious allegations for selling Golden Passports, granting European Union citizenship and residency to persons included in criminal activities, security corruption, tax evasion and money laundering.
While the European Union respects the right of sovereign countries to determine their own, naturalisation processes, visa-free access to the Union, must not, be used as an instrument for leveraging individual investment in return for citizenship.
Strict Regulations are of Critical Importance
Strict regulations and clarity of investor citizenship and residence schemes at national level are of critical importance in determining their impact. Member States should devote particular attention to enhanced customer due diligence in the context of investor citizenship and residence schemes.
Member States should ensure that the application of EU rules on anti-money laundering is not by-passed but strictly adhered to. Applicants who have already, been excluded by other EU states should be rejected automatically.
Enhanced customer due diligence is the independent and objective process of investigating an applicant’s reputation and past-history after their identity has been verified. Engaging a third party to conduct due diligence ensures decisions are based on impartial and reliable results.
This step is, designed to protect and mitigate risks with a person that poses a greater risk of money laundering or is vulnerable to corruption. It is not as straight forward as it seems and we must possess the capability to use specific tools to detect hidden threats and skills in analysing all the elements that can uncover surprising links and connections to sanctioned or untrustworthy persons.
Enhanced Customer Due Diligence is the Key
Enhanced Customer Due Diligence is a full and thorough investigative survey of a person’s business relationship and operating networks, providing insights into network business intelligence and complete business relationship analysis to identify associated companies and principals including directorships and shareholdings, using Global Sanctions Lists.
Adverse Media PEP Screening, in-depth compliance screening, potential visits to official registries and court- houses in multiple jurisdictions and scanning of official gazettes and media publications and extensive research to name just a few. Using a combination of open source intelligence, human intelligence, enhanced due diligence will provide a 360 degree view of the applicant and their business network.
We cannot simply rely on the information submitted by the applicant, particularly Governments reputations and good standing at stake. After all individuals that can afford such large investments, do not appear out of nowhere.