EU urged to suspend Eastern Caribbean countries’ visa-waivers
Transparency International, a global anti-corruption organisation, has urged the European Union to review its visa-free agreements with those Caribbean jurisdictions that operate Citizenship By Investment (CBI) programmes. In a recent report Transparency International said, “In light of the risks of admitting the corrupt and the criminal, the European Union must review its visa-free agreements with these Caribbean jurisdictions and encourage governments to set high due diligence and integrity standards. Ultimately, if the EU is not confident in the ability of these schemes to identify and reject high-risk applicants, it should consider following Canada's lead by suspending the visa waiver to golden visa schemes outside the EU.”
In the Eastern Caribbean, Antigua and Barbuda, Dominica, Grenada, Saint Lucia and St Kitts and Nevis all run Citizenship By Investment programmes where foreign nationals can pay as little as US$100,000 for citizenship, or invest in real estate. Citizenship can be granted within 90 days. There are no requirements to reside in these countries, with the exception of Antigua and Barbuda, which has a five-day residence requirement, and applicants do not even need to pick up their passports in person.
These passports give foreign nationals access to the EU Schengen Area and the UK without having to apply for a visa or undergo any enhanced checks by authorities in EU member states.
According to Transparency International, recent events raise red flags regarding the due diligence process in some of these countries: “The opacity of these programmes compounds the risks. Caribbean countries publish limited information about due diligence checks carried out during the application process. There is also limited information regarding the number of applications received and rejected. None of the countries publish the names of individuals granted citizenship, thus preventing public scrutiny.
"As the programmes become a fundamental part of the economy in these countries, there may be a greater desire to attract more applicants and consequently more funds, increasing competition in such a way that it produces a race to the bottom. Weak due diligence processes and lax control can result in security and reputational risks not only to the countries running these programmes, but also to all countries and regions with which they have visa-free agreements, including the European Union.”
The Organization for Economic Cooperation and Development (OECD) last week released a list of 21 countries flagged as operating citizenship schemes that potentially pose a high-risk to the integrity of the OECD/G20 Common Reporting Standards. The CRS requires financial institutions to report financial information of account holders who are citizens of OECD member countries in an effort to fight tax evasion.
All five Eastern Caribbean countries that operate Citizenship By Investment programmes were listed. According to the OECD, these CBI schemes can be potentially mis-used to hide applicants' assets offshore by escaping reporting under the CRS and, in particular, the IDs or other documentation, such as passports, obtained through these schemes can potentially be used to misrepresent an individual's jurisdiction of tax residence and endanger the proper operation of the CRS due diligence procedures.