The CBI Index: due diligence the key to a successful programme
The standards and the integrity of due diligence checks form the bedrock of CBI programmes
The expansion of citizenship by investment over the past five years has seen the equally rapid increase in competition between the countries that offer such economic citizenship programmes as they vie with each other for investors.
This competition has at times resulted in a reduction in the investment threshold requirements. Combined with a backdrop of growing levels of uncertainty in parts of the world – the scene is set for a record surge of interest in citizenship by investment.
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Change in the international, political, and economic landscape has brought with it the need for more detailed levels of scrutiny, with a focus on financial crime. Terrorist financing, sanctions violations, bribery, corruption, fraud, and money laundering are all under the microscope. This is nothing new, but the stakes are much higher in the citizenship by investment context, because countries seek to protect the integrity of their programmes, the reputation of their institutions, and the value of their citizenship.
Due diligence takes centre stage as it is incumbent upon the citizenship programmes to demonstrate transparency and, more importantly, to ensure they have robust processes, policies, and procedures in place.
Many programmes, particularly those of the Caribbean, are at the vanguard – leading the evolution of due diligence beyond the basic online checks that are undertaken by other countries. The best programmes see the inclusion of on-the-ground enquiries, second-tier corroborative interviews, biometrics, and, most importantly, live ongoing monitoring of applicants.
This latest element is mirrored in the financial services sector – traditionally at the forefront of development in due diligence regulation, fines, and other forms of disciplinary action. It was only in 2012 that HSBC agreed to pay the US authorities $1.9bn in a settlement over money laundering.
The standards and integrity of due diligence checks are, and will continue to be, the bedrock of the programmes and their ongoing success, especially as they attract investors from emerging markets or jurisdictions torn by war and political or economic uncertainty.
It is worth remembering however that not all applicants for citizenship come from emerging markets or ‘broken states’. We can look closer to home. Following the Brexit result, for example, Ireland witnessed a 2,000 per cent increase in applicants from the UK.
