As Popularity of Citizenship-By-Investment Grows, Tighter Vetting by Some Countries Should be Recognized

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Lanny Davis was the attorney retained by St. Kitts and Nevis to conduct due diligence in cooperation with the government to substantiate all claims made above. Davis also drafted a white paper detailing his findings that was submitted to the U.S. Treasury Department. He is still on a small retainer by a consultant to St. Kitts and Nevis.

By Lanny J. Davis

A U.S. passport is a deeply polarizing document for travelers. With the tensions abroad, holding a U.S. passport can put a target on the backs of otherwise unsuspecting travelers. Because of these potential dangers, gaining a second citizenship is becoming a wise investment in one’s security.

Many low-profile, sovereign nations maintain programs that offer travelers an opportunity to gain citizenship or some other desired immigration status in their countries in return for some financial “investment” in the country. One of the most famous is the U.S. EB-5 program, which is used to attract substantial investments (through government-sanctioned metropolitan area development authorities or agencies) — usually $500,000 per applicant – for the purposes of creating jobs in that area in return for being granted a “Green Card,” which then could lead to citizenship and a U.S. passport.

Other nations ask for investments funds dedicated to socially productive activities benefitting the local country, from real estate and job creation (as in the U.S. EB-5 program) or benefits in health, education, and training programs.

However, there are risks to these programs.  The U.S. EB-5 program, for example, has often been subject to fraud – fraud on the recruiting end, as applicants in foreign countries are given fraudulent promises of immediate citizenship by corrupt local agents.  In a recent high-profile lawsuit, 27 international investors, mostly from China, allege that the exclusive regional EB-5 center for the city of New Orleans extorted $15.5 million in proposed development projects that never took place.  Abuses are also reported in other citizenship/passport-for-investment programs, especially those where the funds are received and put into the government’s general funds, with no strings attached and little background vetting or oversight.

Recent U.S. media reports, however, have focused on these “bad apples” or atypical anecdotal stories of abuses.  These reports fail to report the examples of nations who have raised, not lowered, their standards of vetting and oversight, so that Americans can gain the advantage of a passport that doesn’t put a potential “death” target on their backs when they seek to travel on business or for family vacation reasons.

For example, take the government of St. Kitts and Nevis (SKN), twin islands in the Caribbean 1,200 miles southeast of Miami. In the SKN citizenship-by-investment program’s infancy, a handful of wrongdoers obtained St. Kitts and Nevis passports. Rather than ignore their shortcomings to remain competitive in the contest of attracting potential investors, government leaders acknowledged the deficiencies and overhauled their program. I should know—I was hired to conduct an independent review of the country’s revamped program.

On December 4, 2015, I was retained by Prime Minister, the Honorable Timothy Harris, Head of the Government of the Federation of Saint Kitts and Nevis. We were asked to conduct an independent review of the increased efforts of the St. Kits and Nevis Government to enhance and strengthen its vetting and background checking procedures under its CBI.

With a staff that has nearly doubled in size, led by Mr. Les Kahn, an internationally respected former consultant to IPSA International, the unit has added many additional layers of vetting. Each layer requires a written report to explain why a specific recommendation was made, and that report stays in the file as it moves upstream. In addition to conducting internal investigations, unit officials collaborate at length with international partners (including the U.S. government) through established law enforcement channels. Under Mr. Khan’s leadership, the Unit has willingly revoked previously issued problematic passports. St. Kitts and Nevis now operates one of the most stringent CBIs in the world. In addition to conducting internal investigations, Unit officials collaborate at length with international partners (including the U.S. government) before deciding to issue the passport.

Another example is the nation of Dominica, another beautiful island nation in the Caribbean, Prime Minister, Dr. the Honorable Roosevelt Skerrit, with whom I have met twice and who is a most impressive leader of his small island, has been steadfast in his commitment to a rigorous vetting process that involves criminal, character and ethics checks by international law enforcement agencies for all citizenship applicants. For PM Skerrit, having a legitimate and transparent CBI is about more than reputation—it has massive implications for his small nation’s economy. In 2016, the CBI accounted for 39.2% of the country’s total revenue. These resources are critical to rebuild the country and its economy in the wake of tropical storm Erika.

No matter a country’s size and stature, in an age of terrorism and increased need in the global economy for Americans to travel without fear, the citizenship-by-investment programs of small democracies that need such investments ought to be available with appropriate high-level vetting standards.   International media should take the time to investigate and differentiate between those nations who are” selling” passports without regard to the “bad actors” buying them vs. those governments who have put a high level of regulation and oversight into place and continue to raise their standards before issuing passports, knowing they will depress revenues from such bad actors.