The IMI Citizenship by Investment Transparency Index
Investment Migration Insider is launching the world’s first Citizenship by Investment (CBI) Transparency Index to encourage program integrity and address one of the most common criticisms of the industry.
Why a CBI Program Transparency Index is needed
On many past occasions, authors in IMI have lamented the lack of regularized reporting and data sharing on the part of citizenship by investment (CBI) programs. We have often pointed out that, among the three most common categories of arguments brought against the business (that CBI is a “security threat”, is ethically “objectionable”, and is too opaque) the opacity argument is the one that holds the most water:
It is indeed the case that CBI programs could be a great deal more forthcoming as regards the timely disclosure of pertinent data; the industry is not sufficiently open to scrutiny. That criticism is not unfounded.
At the same time, the opacity argument is also the only category of criticism the industry has the power to easily deal with itself. There’s little the CBI industry can do to convince its detractors that CBI is morally justified or not a significant security threat; stakeholders have attempted to do just that for many years but the critics’ minds are long since made up and not open to persuasion.
But it is within the industry’s power to demonstrate high levels of transparency and, thereby, to neutralize and invalidate at least one of the three main criticisms against it.
To that end, it is important to provide frank, objective, and measurable benchmarks and standards of transparency by which the 13 CBI programs can evaluate themselves (and each other). The hope is that a quantitative index that compares CBI program transparency performance will engender public and private debate, self-reflection on the part of program administrators, and – ultimately – lead to lasting improvements in CBI program transparency.
Why we haven’t had a CBI Transparency Index until now
If there’s one thing this industry isn’t short on, it’s indices. Practically every RCBI-firm worth its salt has one of its own. There are indices for passports, countries, and for CBI programs. But there are no CBI transparency indices. Why?
When we first began to develop the concept of the CBI Transparency Index, about two years ago, we contacted a number of industry groups (CBI firms, due diligence providers, and private associations) to propose cooperation on methodology and co-branding. While recognizing the value such an index would provide, these private sector actors nonetheless declined, after several conversations, to collaborate on crafting one.
They (quite correctly) intuited that some of the world’s biggest and most lucrative CBI programs would be unlikely to receive favorable transparency scores, and feared offending the program administrators and political leaders in CBI countries, the good graces of whom were ultimately more valuable than promoting the abstract good of transparency.
It has, therefore, fallen to IMI – an entity that has no vested interest in any particular CBI program but rather in the health of the market as a whole – to design a CBI Transparency Index, which we are happy to publish today.
Methodology and detailed results
We have evaluated the performance of each of the world’s CBI programs on 33 distinct criteria, sorted into five separate dimensions:
- The frequency with which they report program data;
- The degree of detail in the processing data they publish;
- The degree of detail in the financial data they disclose;
- The degree to which historical program data is available; and
- The extent to which integrity measures are in place to ensure equitable and open program management on the part of the government.
Each program received one of five possible scores for its reporting frequency. No CBI program provides monthly reports (Portugal's golden visa, which isn't a CBI program, is best-in-class on this dimension, but the program is naturally not included in the CBI Transparency Index) but Grenada provides quarterly reporting, giving it the highest score on this dimension.
Malta's MEIN and Saint Lucia's CIP report annually and receive a 40% score. Antigua & Barbuda would ordinarily have scored 60% on this dimension but the program's CIU has, for reasons not disclosed, discontinued its practice of bi-annual reporting. Its last half-year report covers the 2020 period, and the program, therefore, falls into the "ad hoc/occasional reporting" category, receiving 20%.
Three programs - the CIPs of Cambodia, Egypt, and North Macedonia - have never shared any data at all, and receive a 0% score.
Processing data richness
We evaluated each program's Processing Data Richness on the basis of the following ten criteria providing a maximum possible 16 points (weighting in parenthesis):
- Application volume - main applicants (2)
- Application volume - dependents (1)
- Application approval volume - main applicants (2)
- Application approval volume - dependents (1)
- Application rejection volume (2)
- Application volume by country of origin (2)
- Application approval volume by country of origin (2)
- Application rejection volume by country of origin (2)
- Average number of dependents per application (1)
- Average number of dependents per application by country of origin (1)
In terms of data richness, Saint Lucia's CIP outperforms that of Grenada and even Malta's MEIN (often considered an example of best practice). While all three provide comprehensive statistics, Saint Lucia stands out for its willingness to share details on the nationalities of its investors, which neither Grenada nor Malta divulges (though the latter does disclose "region of origin").
Financial Data Disclosure
We also evaluated each program's level of Financial Data Disclosure based on eight criteria and with a maximum score of 13 points:
- Total investment amounts published (2)
- Total donation amounts published (2)
- Total government fee amounts published (2)
- Application volume by investment category (2)
- Application volume by investment category and country of origin (1)
- Average investment amounts (1)
- Average investment amount by applicant country of origin (1)
- Details of government disbursement/retention of program proceeds published (2)
Malta is the most forthcoming in terms of disclosing the movement of capital into (and out of) its program, obtaining a score of 11 out 13, falling short of full marks because of its reluctance to report on investor nationality.
Antigua & Barbuda is not far behind, having shared ample and detailed financial details, at least during the years when its CIU was still publishing reports.
Availability of Historical Data
Only Malta and Saint Lucia maintain complete, public, historical records of their respective programs' performance. Antigua & Barbuda and Grenada provide nearly complete data sets (reports are, oddly, unavailable for certain periods), while Dominica, Jordan, Saint Kitts & Nevis, Turkey, and Vanuatu only provide partial data for select periods.
Certain procedural measures are crucial to preventing the blights of favoritism, nepotism, equal-opportunity public procurement, and downright graft. In our Index, we have chosen to focus on the following five criteria, granting each program one point for each criterion they fulfill:
- Government payments to private sector entities disclosed
- Names of agents published
- Agent appointment terms are clearly defined and published
- Reports compiled by an independent authority
- Agent blacklists are published
On this dimension, Malta is considerably ahead of its peers and is along in disclosing precisely how much it has paid to private sector companies (such as Henley & Partners, the erstwhile concessionaire) during the course of the MIIP, and having a program regulator that is independent of both the government and the processing unit.
In aggregate, Malta's MEIN policy is the world's most transparent CBI program, followed by the three Caribbean CIPs of Saint Lucia, Grenada, and Antigua & Barbuda.
A considerable gap exists between the top-four performers and the remainder. The case of Antigua & Barbuda is worth noting because it could very easily rise to become the leader among its Caribbean peers by reverting to its habit of regular reporting, publishing a blacklist, disclosing further details of its payments to agents, and publishing the unpublished historical data it already has on-hand
We hope the audience, private companies, and program administrators recognize the value of CBI transparency and the publication of an index to measure it. We further hope this inaugural edition of the index can serve as an incentive for program authorities to improve and do better in the rankings in the future and, thereby, lift the industry's overall level of integrity.
Readers are encouraged to send in their suggestions for improvements to our (no doubt imperfect) methodology.