CRIME AND CITIZENSHIP: THE SECURITY RISKS OF CIPS
Citizenship by Investment Programmes (CIPs) are a hot political topic in the Caribbean and around the world. The schemes set up by numerous regional governments offer a speedy pathway to citizenship to high net worth individuals (HNWIs) who commit to making a substantial investment in a nation and, in return, receive a passport.
We’ve detailed before at The STAR Businessweek the potential benefits of CIPs, and that there are indeed shades of grey in the process, for better or worse. A CIP’s capacity to offer safe harbour to global citizens fleeing persecution elsewhere is surely a good thing; the risk of a CIP’s abuse for those with criminal intent is not.
So what are the key risks of CIPs as a criminal tool? And what can Caribbean nations do to minimise these risks?
CIPS ARE GLOBAL
Within our region CIPs have been subject to fierce debate. Optimistics point to the appeal of luring HNWIs to nations among the region, with the hope the initial investment their make via a CIP will be followed by further investment down the line.
Critics point out the existence of CIPs alongside offshore banking — especially when linked to the revelations of the Paradise and Panama papers — combine to make a deeply unsettling combination to so many everyday citizens of the region.
There is also the risk that a Caribbean nation with a comparatively small population and economy could find that a new HWNI citizen may seek to play havoc with local business and government, all in the name of undermining and destabilising a nation, especially if their clear-cut investment via a CIP is accompanied by money laundered and passed along under the table.
Such a risk may seem unlikely to occur or succeed but events in Europe show the deep anxiety around CIPs generally, and the risks that are shared globally.
MALTA AND THE EU
Recent times have seen Malta seek to navigate the quicksand that’s arisen following the EU’s criticism of the nation’s CIP. First launched in 2014, the programme was intended to be capped at 1,800 applicants, before the government announced plans to expand it.
Millions have been earned via the programme but there is the risk of sheer numbers in terms of passports. For a nation of just 430,000, the addition of 1,800 new HWNIs as passport holders comes with the potential of a new and saturated security risk.
Members of the European Parliament have criticised the Maltese government’s administration of the programme stating it undermines the concept that citizenship must be earned, and that, in turn, Malta’s conduct puts at risk the security of the Schengen area (free movement of Europeans in Europe) that Europeans enjoy.
Even if another EU state is prudent about who it issues passports to, the efforts could ultimately be in vain if another nation is issuing passports too readily without due discretion.
At the same time this has been occuring, Malta has been making inroads to become a leading cryptocurrency capital in Europe.
CIPS AND CRYPTOS
For critics anxious about the potential security risks that comes with CIPs and cryptocurrency, a nation taking a liberal approach to the first, and intending to do so for the second, raises real anxiety. For its part, Valletta has ruled out making a direct link between the two, indicating that cryptos will not be accepted as payment in the CIP.
It’s also unapologetic in its declarations that cryptocurrency is ultimately “the future” of money, and time may well prove it right. Yet the government has also had a number of high profile financial scandals in recent times, leading to concern that what it says on paper won’t always be implemented in practice. If a real gap here did grow, so too could greater security risks.
At its core, every government around the world has to deal with issues of crime like theft and forgery. But the nexus between the easy acquisition of citizenship and easy flow of cryptocurrency laws leaves many unsettled. Even keen cryptocurrency enthusiasts and advocates have looked on
with worry, concerned that any future upheaval in Malta surrounding its crypto policy could make it harder to achieve fair and common sense regulation for cryptos in other nations.
OLD BORDERS, NEW PROGRAMMES
The Maltese experience illustrates the hurdles for CIP nations near and far: that there’s a growing tension between the ability of a country to have a CIP and a free market financial system.
In many respects this tension has always existed — despite already being a global media tycoon in the 1980s, Australianborn Rupert Murdoch famously could not buy a US TV station until he became an American citizen — so critics cannot fairly suggest all issues with national citizenship in a world of global finance are new.
But though the Caribbean may not hold the same formal structure as the EU, the Maltese experience shows that the close ties held by nations in the Caribbean family mean that a bad CIP is not only a national risk, but a regional one.
Even if many Caribbean nations have taken a dim view of some of the EU’s attitudes towards the region — notably putting numerous Caribbean nations on a tax haven blacklist in December last year but failing to include the UK on it — the shared experience here surely has currency.
CIPs may be relatively new but the proximity and historical links that many nations have with one another is old, allowing for the easy movement of people and business between states.
Unless these ties were subject to revision each time a new CIP is created, it’s not possible for one nation to create a CIP and declare it strictly a matter of national concern, not when there are friendly travel and trade agreements with other nations around it.
A CITIZEN’S RIGHTS
Achieving a regional consensus, much less a global one, on CIPs is not going to happen anytime soon. Neither a new level of restrictions upon the norms of citizenship seen around the world which commonly provide that once someone becomes a citizen, they are wholly one, irrespective of whether they were born in the nation, or to parents from the nation (and notwithstanding certain exceptions surrounding renouncement and dual citizenship).
But it is clear that as our world becomes more economically borderless, the free flow of money and citizenship would not be a risk to one nation, but a risk to all nations. In the absence of finding concensus on CIP regulation, strong inroads being made against money laundering and other global financial crime could find common ground. It may not abate the concerns that critics of CIPs have, but a greater crackdown on money laundering crime in the Caribbean would serve as a warning to would-be criminals that the region’s CIPs are not worth the price of entry.
It’s true that anyone with designs on a CIP for criminal intent would obviously not support such a crackdown; but every good citizen would, however they came to hold that title.
Though the Caribbean may not hold the same formal structure as the EU, the Maltese experience shows that the close ties held by nations in the Caribbean mean that a bad CIP is not only a national risk, but a regional one
Members of the European Parliament have criticised the Maltese government’s administration of the programme stating it undermines the concept of citizenship