Yakof Agius, Chief Officer of Risk and Compliance at the Malta Individual Investor Programme Agency, explains how a systematic approach coupled with the collection of data points on large numbers of applicants can, over time, help predict the outcome of a citizenship by investment application before it is even lodged.
The Malta IIP, by many considered the benchmark among citizenship by investment programs in terms of due diligence, uses a so-called “risk matrix” to build a risk profile of applicants, an approach that grows more efficient over time as the amount of data needed to recognize patterns increases.
“There is a structured way of looking at an application, of extracting a risk profile from that application […]. We are recording the risk profile for every application, and then we are recording the final outcome of that application – so, whether the application was accepted or rejected. Over time, what that means is that certain risk profiles will emerge that will be able to predict the outcome of an application,” said Agius about the approach, which will help the MIIP nip root out potentially problematic applications at an early stage and generally to improve due diligence by directing resources and focus in a more targeted manner toward high-risk applications.
Asked whether a similar approach could be adopted by the due diligence teams of other citizenship by investment programs, Agius pointed out that the IIP’s risk-matrix would lend itself easily to any CIU, but that accuracy would be slightly lower because of fewer data points.
“It can easily be adopted by other citizenship by investment units (CIUs) because having more data that feeds into the risk matrix helps it be more accurate, but if a CIU cannot invest the same resources that we invest and their data points are limited to 50% or 25% of what we have then, still, the risk matrix will give an indication based on that 25% of data.”