Misuse of Citizenship and Residency by Investment Programmes

Citizenship and residency by investment (CBI/RBI) programmes are government-administered programmes that grant citizenship or residency to foreign investors by expediting or bypassing normal migration processes.

These programmes

• Can help spur economic growth through foreign direct investment.
• Are also attractive to criminals and corrupt officials seeking to evade justice and launder the proceeds of crime amounting to billions of dollars.

In response to the FATF Ministers’ call in April 2022 for greater focus on corruption, the FATF completed a joint project with the Organisation for Economic Co-operation and Development (OECD) that explores the money laundering and financial crime risks associated with CBI/RBI programmes, including risks related to

• Foreign bribery, fraud and corruption, and
• Their impact on public integrity, tax and migration.

FATF President T. Raja Kumar said.

• “Granting citizenship and residency to wealthy investors through 'golden' passport and visa programmes can potentially lead to economic growth. But they can and are being exploited by criminals and the corrupt, who want to launder their money, hide their identity and assets, or commit further crimes. This report calls on governments operating these programmes to implement various safeguards to ensure these programmes are administered risk-sensitively,” 

OECD Secretary-General Cormann said.

• ”Criminal exploitation of citizenship and residency programmes is a multi-billion-dollar business to launder the proceeds of fraud and corruption, evade justice, or access third countries.
• Our joint FATF-OECD work identifies the risks and vulnerabilities around golden visa schemes and offers a series of mitigation measures to help policymakers and programme operators, including appropriate due diligence, transparency, and integrity mechanisms,” 

Properly managed CBI or RBI programmes can benefit both host countries and individuals, but in practice, such programmes bring significant risks of money laundering, fraud, and other forms of misuse.

The report emphasises

• That the elevated risks of money laundering and financial crime in these investment migration programmes relate not only to the applicant but also to the professional enablers and intermediaries involved in the process. It is therefore essential to ensure clarity around the respective roles and responsibilities of the various parties involved in RBI/CBI programmes to be able to detect fraudulent activity. 

The report highlights

• How CBI programmes can allow criminals more global mobility and help them hide their identity and criminal activities behind shell companies in other jurisdictions. It highlights the vulnerabilities of these complex and international investment migration programmes, including the frequent use of intermediaries, involvement of multiple government agencies, abuse by professional enablers and lack of proper governance of the CBI/RBI programmes. 

The report proposes measures and cites examples of good practices that can help policymakers and those responsible for managing investment migration programmes to address these risks. These include

• An in-depth analysis and understanding of how criminals can exploit CBI or RBI programmes.

The report highlights how

• Governments can incorporate risk mitigation measures, such as multi-layered due diligence, in the design of their investment migration programmes.

The report emphasises

• That the elevated risks of money laundering and financial crime in these investment migration programmes relate not only to the applicant but also to the professional enablers and intermediaries involved in the process.
• It is therefore essential to ensure clarity around the respective roles and responsibilities of the various parties involved in RBI/CBI programmes to be able to detect fraudulent activity. 

Source

https://www.fatf-gafi.org/en/publications/Methodsandtrends/misuse-CBI-RBI-programmes.html