THE ROLE OF DUE DILIGENCE IN CITIZENSHIP BY INVESTMENT PROCESS

Due diligence is crucial in the Citizenship by Investment process. It involves investigating, verifying, and assessing an applicant’s background, financial health, legal standing, and reputation, before the citizenship is granted to the applicant and their family.

This comprehensive process includes analyzing and evaluating data (essential information of individual applicants) from multiple sources, not only the individuals are vetted but their business, and or the source of the investment is vetted, the process helps the authorities such as CIUs "Citizenship by Investment Unit" gain a deep understanding of the applicants and how the funds are earned/generated. A comprehensive due diligence process uncovers hidden pitfalls.

The process must start during the initial consultation when the advisor meets the clients, it’s advisor’s responsibility to evaluate properly and unfortunately many of the advisors “so called” does not know the reasons that may lead towards the rejection of an applications, whereas almost all the Caribbean application form 1s contain a section called “declaration”.

What we do is that we collect all basic documents such as birth and marriage certificates, their national/residence IDs, copies of their passports and source of funds, with client’s permission we start with the world check that gives us or professionals such as ourselves a tools that helps meet due diligence obligations, including “Know Your Customer”, “Anti-money Laundering”, “Counter-terrorist Financing Legislation”, “Anti-bribery” and counterparty screening, by this we help ourself and it saves our clients time and money both. Once we are satisfied, we collect all the documents, legalize/notarize as per the requirement by concerning authorities and share with the concerning CIU “Citizenship by Investment” along signed application forms etc.

Citizenship by Investment Units usually takes 90 days or so (may vary based on individual applications and their family composition) and is confidential at all stages, the process (online and or on-ground) is usually conducted in stages, and during the process reputed local and international firms are engaged by concerned Governments, partner Governments are involved for external checks, verification of the information provided in the application forms and shape of supporting documents

An MOU “Memorandum of Understanding” was also signed earlier this year (20th of March 2024) between four out of five Caribbean states that are offering Citizenship by Investment Programs “Antigua & Barbuda, Commonwealth of Dominica, Grenada, St. Kitts & Nevis, and the fifth of the country St Lucia has joined them later, the MOU was signed with the primary objective of the agreement is to standardize Caribbean Citizenship by Investment programs, to share and exchange information regarding applicants (subject to the law and regulations governing privacy and data protection in each jurisdiction and to implement enhanced transparency such as disclosing funds received by Citizenship by Investment Units and how they use the proceeds. One of the highlights for this MOU was also to implement and establish a digital portal accessible to all authorized parties, to be established at the JRCC (Joint Regional Communications Centre) which is an arm of the CARICOM agency for crime & security” also cross-references all applicants (principal applicant, spouse, and all included dependents aged 16 and above) against regional watchlist and Interpol databases as part of the external due diligence process to ensure right candidates is successfully processed.

WHAT IS THE PURPOSE OF DUE DILIGENCE 

The purpose of Due diligence is to ensure the investor’s identity, to make sure they are not involved in any sort of criminal activities, source of fund is legal and traceable, not involved in money laundering (or other financial crimes), travel history is clear and traceable (that including visa refusals/rejects), political exposure, and public reputation amongst other checks.  The process may vary among countries, the applicant’s nationality (such as for nationals from Iran needs to go under enhanced due diligence while applying for Commonwealth of Dominica and have to pay a higher due diligence fees), country of current residence or where the source of funds is generated from et cetera, one thing is for sure is that all the countries offering Business Migration, Citizenship by Investments, Permanent Residency or Golden Visa programs mandates rigorous due diligence processes of potential investors before approving their applications.

WHO ARE HIGH RISK INDIVIDUALS?

Some of the examples that are classified as high-risk individuals are, arms smugglers, convicted criminals, human traffickers, intellectual property violators, individuals from sanctioned countries list, individuals that are involved in organized crime, PEPs, pedophiles, senior government officials, subject of interest, terrorist financing, war lords, war criminals et cetera.

THE BOTTOM LINE

RCBI “Residency / Citizenship by Investment” programs bring a significant investment inflow (cash and capital) to the host country that is offering the program, if the government fail to take the required measures that inflow may raise a high risk of financial and or criminal activities. Due diligence provides a comprehensive assessment of different aspects of the applicant and their financial background, enabling the CIU to identify potential risks, and make informed decision to make sure Residency / Citizenship are granted to individuals that have been successfully vetted.