Many Caribbean nations maintain that Citizenship by Investment Programmes (CIPs) are a leading example of a truly global industry serving a truly global audience. While specifics surrounding a programme will vary from country to country, all have in common the opportunity for foreigners to invest money within a nation in return for a passport.
Just as in any marketplace with many providers, changes in one CIP can impact the others, for better or worse, as global citizens search among CIP offerings for one that benefits them the most.
That’s why recent changes to the CIP offered by Cyprus are important, not just for the future of the Eastern Mediterranean island, but all nations that offer CIPs. Now is a good time to recap changes made across the seas, and what it could mean for the Caribbean family.
The Unique Appeal of a Cypriot CIP
For many years the Cypriot CIP was among the most desirable in the world: a stable democratic nation, averaging over 300 days of sunshine a year, with a CIP passport acquirable in just 90 days that would give a newly minted Cypriot resident immediate access to the European Union. The price tag of Euros 2 million was expensive by CIP standards, but offered terrific value for money for those needing easy and speedy access to the EU.
However, it was this speed and accessibility that saw the Cypriot government come under intense pressure from the European Union. For Brussels, such a rapid turnaround for such far-reaching access represented a security issue, as well as a lightning rod for criticism surrounding money laundering, corruption and other criminal activity.
Previously called the Cyprus Citizenship by Investment, the rebranded Cyprus Investment Programme comes with a number of new restrictions. Now, would-be citizens must maintain an investment in Cyprus for five years since the date of their naturalisation, an increase from three. Any applicant who has previously been rejected for a CIP by another EU nation will be ineligible to take part in the Cyprus Investment Programme. And finally, even if they are granted a passport, non-EU nationals will require a valid Schengen visa for travel throughout EU member states. With these greater restrictions, an increase in global citizens shopping around is sure to follow.
The Cyprus Experience in the Caribbean
For local nations there’s the opportunity to respond to Cyprus’ decision in two main ways. For those with CIPs who also retain strong economic and cultural links to Europe (including, for now, the UK), such as Antigua and Barbuda, Dominica, Saint Kitts and Nevis, and Saint Lucia, the new restrictions on the Cyprus Investment Programme offer an avenue to reframe their current offerings as an easier path to obtaining another passport.
By having to make reforms, Cyprus may leave prospective applicants fearful of future revisions to its CIP. Local nations could highlight that, by comparison, they can offer greater stability and predictability with their CIPs.
Cyprus is not alone as a nation that has reformed its CIP, and the pressure placed upon it by the EU was interwoven with in-country concerns that the CIP was being utilised for money laundering and corruption, alongside lowering defences against foreigners of poor character who would see a Cypriot passport as a pathway to new criminal activity. Earlier this year the Cypriot government addressed this by allocating Euros 1.4 million to investigate and carry out due diligence on CIP applicants.
Here in the Caribbean, many native-born citizens have expressed concern surrounding the security of CIPs. While not everyone may be happy with the existence of CIPs, all should agree that upgrading security to ensure that all applicants are of good character is a wise move.
Global Citizens Responding to Global Events
Alongside Cyprus’ reforms, there are numerous global trends that will continue to impact CIPs in the near term. The first and most obvious is Brexit. While it’s known that the UK will retain a strong trading relationship with the EU, no matter what, whether this also includes Freedom of Movement for Britons to work and travel in Europe, as it does today, remains uncertain. For those with the ways and means to hedge their bets, there’s every reason in this period to acquire an EU passport via a CIP.Second is the increasing control of capital and its citizens generally by the Chinese government. With China among the biggest markets for CIPs globally, a passport from another nation offers a new flexibility when it comes to movement in and out of the country. There’s even the possibility for a Chinese citizen to renounce their native citizenship and thereafter rely exclusively on the passport acquired via a CIP as their means of national identity and citizenship.
Finally, there’s the new flirtation with protectionism generally. The push to have ‘local goods made by local workers for a local market’ helped propel Donald Trump into the White House in 2016. Today it also accounts for many countries wanting multinational companies that earn locally, to be taxed locally. For those resistant to such changes, a CIP offers another tool in the arsenal.
Securing a Future for CIPs
Many beneficiaries of CIPs and CIP-advocates may point to the relatively few scandals surrounding successful applicants as a sign that the schemes work. Of course, CIPs can hold substantial security risks if managed incorrectly, and ultimately the nature of serious organised crime often means a huge scandal exists only in rumours and whispers for a long time, until it is totally blown open with devastating and far-reaching consequences.
This is a particularly important consideration given the relative youth of most CIPs in the region. This is no suggestion that CIPs have no place, nor that they can’t offer real positives for applicants and their desired nation. Those who seek to simply dismiss Cyprus’ latest reforms as a speed bump on the road to ongoing profits with CIPs would do well to recall the old adage: ‘Where there is smoke, there’s fire.’
Now that Cyprus has made its CIP tougher, those with criminal intent who once may have looked to Nicosia for a passport, may now have their sights set on a Caribbean nation. In response, all governments need to re-examine security for the benefit of all their citizens — good citizens — whether native-born, naturalised, or seeking to arrive in the future.
