Grenada: Buyers of Illegally Discounted CBI Real Estate Could Lose Citizenship

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Yesterday, Grenada’s Citizenship by Investment Committee (CIC) issued a memo in which it once again reminded program stakeholders that discounted offerings in the form of rebates or share buybacks by its agents are explicitly banned.

Reiterating its reprimand

The CIC began the memo by reminding promoters that the official minimum investment amount for real estate, according to regulations dating back to 2019, remains at US$220,000:

“Pursuant to this, they should not offer any option that is below the statutory minimum of $220,000 in case of projects approved under this option or $350,000 in respect of projects not approved under the $220,000 option. In the case of an investment into the National Transformation Fund, the minimum investment required is the sum of $150,000.” 

The CIC drew attention to a circular on the same matter from July 2020, in which it said it was aware of the “aggressive promotion of a share buyback arrangement with a substantial reimbursement to the purchaser, via the marketing agent, immediately post the applicant obtaining their citizenship.”

A number of Grenada CIP stakeholders with whom IMI has been in touch say the memo is aimed at the one particular high-profile developer widely known to engage in the buybacks and rebates practice.

The CIC highlights that such practices directly contravene the country’s CBI regulations by “effectively providing a discount to the amount required to be invested by applicants under Grenada’s CBI Program so that such investment amount falls below the minimum qualifying investment […].”

The CIC further indicated that the buyback and rebate structures had led not only to investors’ acquisition of qualifying real estate below the required minimum for that category but also at rates even below the minimum for the donation option:

“Furthermore, it is understood that this process is inducing applicants to invest amounts below the qualifying investment stipulated by Regulations under Section 10 of the Grenada CBI Act for the National Transformation Fund.”

Offending developers could face loss of license; investors could lose citizenship

The CIC emphasized the severity of the issue, reiterating its message from 2020 that any party found guilty of partaking in such practices may "face legal sanctions", such as revocation of their licenses or project certification. The penalties may also extend to CBI applicants, who could see their approvals and Grenadian citizenships rescinded. 

The Committee even urged program stakeholders to contact them directly and urgently if they encounter any promotional material inconsistent with the government's regulations.

Reacting to the circular, Mohammed Asaria - head of Range Developments, which is building two CBI-approved projects in Grenada - said the past six months had seen "a fundamental philosophical change in the operation of Caribbean CBI programs: Governments and communities are demanding that developers fulfill their obligations and deliver." 

He indicated the shift in perspectives had begun in Saint Kitts & Nevis, which recently introduced new, tougher rules that "sanction developers who don't deliver."

Asaria says Grenada has "followed suit" and that yesterday's circular "means that anyone who is involved in promoting, soliciting, or investing in an illicit scheme will be sanctioned with the loss of license, project certification, or citizenship, respectively."  

"My message to citizenship seekers," concluded Asaria, "is caveat emptor – if you invest amounts below the statutory threshold, do not be surprised if you lose your citizenship. Times have changed for the better. Let real development begin."

Clients "disoriented by the convoluted process"

Heather Bain - Managing Director of ATB Global Mobility Inc, a Grenada-based CBI advisory - characterized the situation as "a highly dangerous one," pointing out that "the entire reputation of the program is at risk."

She also pointed out that she knew prospective investors who had met the offending companies and had been "disoriented by the convoluted process."

"The procedure," said Bain, "is so confusing that many of these investors end up talking to people who pose as CBI facilitators but, in truth, have nothing to do with it, and the investors end up being conned out of their money."

She further warned that investors who obtained citizenship through these questionable methods "will have to carry the risk of the government revoking it in the future for defrauding the Grenadian state."

Bain commended the government for "putting its foot down and actively investigating the matter", a decision she believed would "preserve the program, especially now that the US government is actively involved in Caribbean CBI and the EU is putting more pressure on investment migration as a whole."

See also: CBI Real Estate Watch - Putting the "Real" Back in CBI Real Estate